Point-and-Click: Homeowners' Monthly Payments Go High-Tech

Co-op and condo owners have long had the ability to pay maintenance by pre-authorized debit, a check sent on a predetermined date by their bank, or physically mailing a handwritten check. But mail can get lost, and some shareholders are averse to third parties accessing their bank accounts at will.

"Point and click" changes all that. It utilizes an electronic lockbox, or an "e-lockbox" on the management company's website, allowing co-op shareholders and condo unit-owners to control the date and amount of their payments. Better yet, payment can be made without a payment stub.

One advocate is Larry Kinitsky, president of Bayside, Queens' 1,850-family Windsor Park cooperative, managed by AKAM Associates. "There is no possibility of a late fee [to the shareholder], and it gets to the building faster [than with conventional methods], so the co-op has the use of the funds sooner," Kinitsky notes.

Gerard J. Picaso, president of a namesake firm that manages 48 buildings across Manhattan and Queens, says 70 percent of the people in his buildings now pay electronically, whether by automatic debit or point-and-click on the website.

"A lot of the people who send in maintenance [by check] don't send in the bill or send in the wrong amount and that gets kicked back to us," Picaso says. By using the website to transfer money, homeowners "control the amount of money and control the date. The disadvantage is you have to do it every month," he points out, whereas "with the automatic debit, you set it up and it's done.

Lonny Alpert, chief financial officer at AKAM, which manages 90 co-ops and condos across Brooklyn, Queens, and Manhattan, says the company's online-payment program is the fastest way for a building to collect its maintenance or common charges and reduce the possibility of arrears. Typically, there is no more than a 48-hour waiting period to see the payment posted in the building's books. "From AKAM's perspective, there is more working capital to pay vendors in a timely manner," he says.

AKAM, which is rolling out point-and-click in stages, uses third-party vendor E-Tran (a subsidiary of Data Impact Corp.) to facilitate payments between shareholders and the collecting bank.

"A lot of tenants didn't like giving us authorization to take their money," says Makhan Taylor, assistant controller at AKAM, comparing point-and-click to direct debit. "They didn't feel like they had control using a preauthorized debit."

One concern to some shareholders in an age of widespread identity theft is giving up bank details to a website. Scott Skorobohaty, senior vice president of the Business Concierge Group, North Fork Bank, a division of Capital One, says a shareholder's bank information is stored on a server with E-Tran. The bank has agreements with E-Tran to protect and secure privacy. "For all appearances, shareholders are dealing with North Fork Bank and their managing agent," Skorobohaty says.

Windsor Park's Kinitsky says the security angle should not be a worry. "Because you are giving [bank] details to a secure site and a reputable company, it does not really concern me. It is no different from making a purchase and giving your credit card number to a third party over the phone."

Dan Wurtzel, chief operating officer at Cooper Square Realty, which oversees 40,000 apartments in New York City, says 30 percent of his clients now use some form of electronic maintenance remittance. Cooper Square utilizes "KliknPay," offered by Klik Technologies, as its third-party e-lockbox. "We can't access any of the information on our shareholders that sign up for KliknPay," says Wurtzel. "We can only confirm they have signed up. We have no information on their bank or their password." (Klik Technologies did not respond to a request for information.)

An e-lockbox service is usually paid for by the real-estate management company earning credits on deposits, says North Fork's Skorobohaty, so there is no cash outlay. Earnings credits are effectively paid like interest for the bank having the use of the cash. It takes 30 to 60 days to set up.

Skorobohaty says a self-managed building can theoretically use the same web-based point-and-click arrangement, but smaller buildings may not generate enough fees to make it cost-effective.

Cooper Square's Wurtzel though says while electronic maintenance payment is popular, they have not yet made it the only way to pay. "We are in a service business and have to offer a range of options," Wurtzel says. "The only thing we don't do is cash."

Adapted from Habitat January 2008. For the complete article and more, join our Archive >>