Peter Lohmann's Newsletter - Issue #203

ACH Deep Dive for Property Managers: Your Questions Finally Answered

It's Wednesday. You ran owner disbursements on Monday. Three owners have emailed asking where their money is, one of them twice. You log into your software and there is nothing to see: no status, no ETA, no tracking number. The money is somewhere between your trust account and your owner's checking account, and you have no idea where.

I've been on the receiving end of this, and I've seen probably hundreds of PM business owners complaining about it online. Inevitably someone chimes in talking about “NACHA Files”, whatever those are. Then someone else asks: when are we getting Same-Day ACH? And by the way, how on earth are tenants sometimes able to reverse ACH rent payments months after the fact?

I decided to figure out what the hell is actually going on. Warning: This is long.

Tenant Rent Payments - How Long to ACTUALLY Clear?

Let’s explore how ACH works when tenants pay rent, because it’s a little simpler and will frame this up nicely. Tenant ACH payments settle in one to two business days, and Nacha rules give their bank two business days to reverse it.

One terminology note, because these two things sound the same and aren't. Nacha is the organization whose rules govern every ACH payment in the country, including rent payments. A NACHA file is a specific format you hand your bank to send payments yourself. Everything follows Nacha rules, but nothing about a tenant rent payment involves a NACHA File, and ~nobody recommends using them for that purpose. More on those files later, though.

Sound good right? Cleared easily within a week, so what is going on when a tenant is able to reverse a payment 6 weeks or even 6 months later??? Check this out:

• Nacha rules allow tenant “unauthorized charge” reversals within a 60-day clock that starts at the settlement date.

• Regulation E (federal consumer protection rule) runs a different clock, starting from the date the bank sends the statement the transaction appears on. A rent debit that settles August 1 may not hit a statement until the cycle closes August 31, mailed September 1. The consumer's Reg E deadline is then roughly October 31. That's day 91. Fun!

• Reg E reversals work like this: first, the tenant tells their bank the debit was unauthorized. Their bank investigates and reimburses the tenant. That bank is now out of pocket, so it files a breach of authorization warranty claim against your bank, on the grounds that your bank warranted the debit was properly authorized. Your bank pays, then debits your account under your origination agreement.

• Nacha’s warranty claim window runs two years from the settlement date on a consumer account (omg) plus a separate carve-out that lets the tenant's bank reach any entry falling within 95 calendar days of the first unauthorized entry, even if that one settled more than two years ago. Oof. Got all that?

Bottom line: The vast majority of ACH rent reversals you’ll see occur within 60 days of settlement. In rare circumstances, a tenant can pull back rent up to two years later.

Paying Property Owners - Normal ACH (e-Pay)

When you pay an owner using ACH through your PM software, your money does not go directly to your owner. It goes to your software's payment processor first (that’s the batch-pull you see on your bank statement), and THEN to your owner. Two separate ACH transactions, with the third-party processor holding your owners' money in between:

1. The Pull. You approve the disbursement batch in your PM software. Your software's payment processor originates an ACH debit against your trust account and pulls the money out. Note the direction: the processor is reaching into your bank account. You're not sending anything.

2. In Between. The money sits in the processor's account — typically a pooled "for benefit of" account holding funds for every property manager on the platform. Held for some number of business days, depending on the processor, the PM software, and their perception of your credit risk.

3. The Push. The processor originates an ACH credit out to each owner's bank account. This settles overnight (fast).

The Pull is a debit, which can be returned. The Push is a credit, and once a credit settles, it's gone — irrevocable, no clawback. So the processor is in an obvious spot: if it pushes money to your owners but then the pull from your trust account bounces, it's out the money. That's the reason for the hold. The processor wants to be sure its debit against you stuck.

Importantly, if your owners see funds hitting within one to two business days of initiating disbursements, your PM software and/or their processor is actually extending quite a bit of credit to your company and taking on risk (in some cases, initiating the Push before the Pull has even cleared).

So that all makes pretty good sense. Property managers reporting a wide range of owner disbursement timelines (I’ve seen anywhere from 1 to 5 business days) are on the other end of policies and credit decisions by their PM software, and that software’s payment processor.

Speculation: The processor’s clearing policies are influenced by their ability to earn interest on the float, which is presumably used to offset fees the processor charges your PM software. If your PM software is willing to pay more fees to the processor, they’ll relax the hold day requirements. Your software’s willingness to do so may vary.

NACHA Files and You

Some property management software allows property managers to export a small file that you can upload to your bank to initiate a direct ACH Push to your property owners. This is called a NACHA File. It’s an alternative to the PM software’s built-in ePay/ACH for doing owner disbursements. Not all software supports it, and most of the ones that do don’t make it easy (or force you to choose between their native e-Pay and NACHA files).

A NACHA-file ACH typically settles on the next business day. If you submit before a same-day window cutoff time, it can land the same afternoon. And starting September 18, 2026, standard next-day ACH credits have to be available to the receiver by 9:00 a.m. local time on the settlement date, regardless of when the file arrived.

Sounds great, right? Well, there are a few things to consider before jumping on the NACHA File bandwagon:

1. The file is plain text with no encryption. Open it in Notepad and read every owner's name, routing number, account number and amount. Yikes.

2. Sent the file to your bank with mistakes? You literally pay for any errors. Bank origination agreements are unambiguous: you pay for any entry you transmitted "regardless of whether the Entry was erroneous in any respect."

3. Your ledger and your bank can quietly disagree. The software posts the disbursement when you create the batch; the money moves when the bank originates. If the upload fails, your software doesn't know.

4. Control totals are supposed to verify the batch, but they're calculated from the entries in the file itself — edit the file, recalculate, done. And the entry hash only covers routing numbers, so changing an owner's account number changes nothing. The file still balances.

5. Dual control: some banks let you require a second approver. Better than nothing, but most approval screens show a batch total, not a payee list. Swap an account number, leave the amount alone, and it sails through.

Both safeguards watch the money. Neither watches where it's going. The only check that catches this is a human comparing the file's payees against a report from your software. Still light years from the security of native ePay through your PM software.

Why Don't the PM Platforms Make NACHA Files Easy?

Here is where facts end and informed speculation begins. My guesses:

• Every disbursement that moves to your bank is on a rail where it stops controlling the failure mode, but still gets the support ticket when it creates an accounting headache or your bank rejects a file.

• Transaction fees (like ACH fees) are a big source of revenue for most of the PM software vendors, and growing faster than subscription fees. Giving property managers a way to avoid some of those fees is probably not high on the priority list.

• Letting property managers easily export an unencrypted list of all their property owners’ bank account details is risky no matter how you slice it.

In Conclusion

None of this is a scandal. It's a series of decisions about risk, float and fees. That said, understanding how it all works is powerful for three reasons. First, it lets you set practical policies for rent payments and owner disbursements. Second, you can research and shop property management software intelligently. And finally, you can clearly advocate for yourself and your property owners when speaking with your current PM software and payment processor.

-Peter

Level Up Your AI with Wolfgang Croskey

Wolf is my co-founder at Crane. He's spent the last year doing the real work: building AI into a property management business, watching what holds up and what doesn't, and having the compliance conversations people are still avoiding.

On August 13, he's doing a free, public session with Second Nature's Andrew Smallwood where he's sharing all of it. His tech stack, his AI stack, the wins he can put numbers on, and the mistakes worth learning from. Plus what every PM needs to know about Fair Housing, TCPA, and FCRA before letting AI communicate on their behalf.

Register here for the live event + recording.

Can you really control how (and when) you lose owner clients?

Stephen Glover and I have crossed paths at NARPM events and masterminds for years, but this was our first time on the podcast together. His stat stopped me cold: Peak Property Management went roughly 5 years and 700-800 units without ever losing a client to dissatisfaction. Every departure was a planned asset sale.

We get into how he built that reputation (he's turned down 4,000+ units over the years), a leadership philosophy rooted in Jocko Willink's Extreme Ownership after training alongside a Navy SEAL community, and what happened to his churn numbers the moment he let go of the reins.

Also available on Apple Podcasts and Spotify

Property Management Companies For Sale This Week

• Montana property management firm with over a decade in business (asking $145k, $146k gross revenue)

• This full-service property management and remodeling business in Cape May County, NJ is still available (asking $450k, $650k gross revenue)

• Recurring-revenue property management company in Denver, CO (asking $495k, $562k gross revenue)

• Semi-absentee 3-unit multifamily investment in Miami, FL (asking $650k)

• Established PM company in Western Wisconsin (asking $550k)

If you plan to buy one of the property management companies above, I recommend using Live Oak Bank’s Property Management Lending Team to finance the deal.

Industry News & Events

• Enterprise Bank just announced an AppFolio Stack partnership, the first in AppFolio's new Banking partner category.

• RentEngine’s Q2 leasing report is finally out. It’s so good. Grab it here.

• Zillow is laying off 500 people.

• Next week—sharing what I've learned from 3 years of working with a personal assistant. Catch Peter & The Wolf live, register here. We’re regularly cresting 100 live attendees, it’s a vibe.

• Not sure what this is or who is behind it - check out Folio. Flat-rate PM system that purports to do everything your PM software does, all on a single platform. Hard to tell but it looks like it might be custom-built for each customer.

Closing Thought

Did you miss it? 3 highlights from Tuesday’s Newsletter:

1. The industry’s first real Operations Benchmarks (from ProfitCoach)

2. $300 smart glasses for your maintenance team?

3. KKR / Avenue One breakup meme.

Software I’m using to scale my 700+ door property management company:

Note: These are affiliate links, but I’ve been recommending all these companies long before any financial arrangements came into place.

The content of this newsletter is for informational purposes only and does not constitute professional advice. I may have consulting agreements with, or financial interests in, companies mentioned in this newsletter. Additionally, some of the links included in this newsletter are affiliate links, meaning I may earn a commission if you make a purchase through these links. Always perform your own due diligence before making any financial or business decisions.