Paying Maintenance with Credit Cards

Late last year, along about November, Ira Meister started noticing something strange. A lot of people living in co-ops and condos started paying their monthly charges with credit cards.

“There’s an uptick of credit card use because credit card issuers are becoming increasingly competitive and aggressive with their loyalty programs,” says Meister, president of the property management firm Matthew Adam.

Of the 10,000 co-op and condo units that Meister manages in Manhattan, some 800 unit-owners and shareholders now use credit cards to pay their monthly charges – and it’s not always because of financial hardship.

“It’s not that they’re living off credit cards,” says Meister. “They’re more interested in reward points.”

Meister’s co-op shareholders and condo unit-owners pay with credit cards through an outside service called ClickPay.

"We do charge the resident a fee and out of that fee we pay the credit card associations like Visa, Mastercard, American Express, the merchant bank and the processor,” says Tom Kiernan, CEO of ClickPay. “The fee schedule is presented to them as they pay online and the resident agrees to the fees before the payment is submitted."

Kiernan declines to specify ClickPay’s fees.

“Different credit card companies have different fees but there is no impact on us when a unit owner pays by credit card,” says Dylan Pichulik, CEO of XL Real Property Management, which manages three condo buildings in Tribeca, the Upper East Side and Brooklyn.

Pichulik’s residents can pay with a credit card through Paylease. “Tenants can use it to pay their rent online for free from their checking account, but if they pay with a credit card, there is a 3 or 4 percent surcharge to the credit card company,” says Pichulik.

So, for example, if common charges are $1,000 a month, add an extra $30 to $40 on top of it.

Offering the option of credit card payments is one way property managers enhance customer service.

“We have a link on our website and the unit-owner clicks on it to enroll in automatic payments and then they can pay their monthly fees with a credit card,” says Pichulik. “We have about three to four people a month in each of our three buildings who use their credit card because they’re either strapped for cash or they want the reward points.”

But it’s not necessarily a red flag when residents repeatedly use credit cards to pay their monthly fees. “It’s when they don’t make payments that boards and property managers get worried,” says Pichulik.

An added benefit of paying monthly charges with a credit card is that it minimizes late payments and improves cash flow for co-op  and condo buildings. “Property managers gain a guaranteed transaction that’s either instantly approved or declined. There’s no bounced checks or return fees to contend with,” Pichulik says. “Since co-op boards depend on the money to pay the building’s operating expenses, they want to make it as convenient as possible so that there’s no issue with payment.”

Payment by a credit card also offers added security and protection in the event of hacking or identity theft. “The security and protection of using a credit card is the opportunity to dispute a charge if need be,” Pichulik says.

Yet some boards balk. “One reason many condo and co-op boards don’t offer the option of paying maintenance and common charges is because legally it requires a written or electronic contract whereby the shareholder agrees to pay the credit card service fee as part of the transaction,” says Aaron Shmulewitz, head of the co-op/condo practice at Belkin Burden Wenig & Goldman, a Manhattan law firm. “Otherwise the board could end up footing the bill.”

If a board doesn’t offer the option, Shmulewitz advises shareholders and unit-owners to appeal to the management company.

Even with the increasingly hefty reward points that loyalty programs are offering, not all residents see the virtue in paying additional credit card transaction fees.

“Our monthly payment is automatically withdrawn from our bank account by the management company,” says Elaine Richheimer, who purchased a Manhattan co-op five months ago.

Richheimer and her husband set up the $1,796 maintenance fee to be paid through the co-op board’s management portal online.

“It doesn’t make sense to pay extra in credit card charges even if you get reward points by paying for them,” says Richheimer, who works as a real estate agent.

A growing number of co-op and condo residents would beg to disagree.