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Real Estate PAD Addendum

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REAL ESTATE PAD ADDENDUM

This Pre‑Authorized Debit (PAD) Addendum ("Addendum") is made a part of the Lease/Purchase Agreement dated between:

Parties

Property Identification

Authorization — Pre‑Authorized Debit (PAD)

By executing this Addendum, Tenant authorizes Landlord (or Landlord's agent) to initiate electronic debits to the bank account identified below for payments due under the Lease/Purchase Agreement. This authorization applies to payments described in the "Authorization Scope" below and remains in effect until revoked in writing in accordance with this Addendum.

Recurring debit One‑time debit

Rent only Rent, late fees, utilities, damages and other charges payable under the Lease/Purchase Agreement

Tenant authorizes variable debits where the amount may change from one debit to the next to reflect periodic obligations. If variable, enter maximum single debit amount:

Bank Account Information

Checking Savings

Processing, Fees and Notices

Tenant acknowledges that debits will be initiated on the agreed payment day and that items may be processed on that day or on the next business day. Tenant will be responsible for any returned item fees and will promptly remit any shortfall. Enter returned item (NSF) fee amount:

Standard processing time after receipt of written revocation or change is business days unless otherwise agreed in writing.

Representations, Warranties and Indemnity

Tenant represents and warrants that the account information provided is accurate and that Tenant is authorized to provide the authorization for the account specified. Tenant agrees to indemnify and hold Landlord harmless from any loss, claim or expense arising from Tenant's failure to provide correct account information or to maintain sufficient funds in the designated account.

Landlord will not be liable for any incidental, consequential or special damages arising from the exercise of the rights under this Addendum except for damages resulting from Landlord's gross negligence or wilful misconduct.

Dispute and Governing Law

Any dispute arising out of this Addendum will be governed by the laws of the state entered below. Tenant and Landlord agree that written notice is required for any dispute, and that notices provided in accordance with the Lease/Purchase Agreement are sufficient for this Addendum.

Tenant acknowledges receipt of a copy of this Addendum and understands that by signing below Tenant authorizes Landlord to debit the account designated above in accordance with the terms set forth herein.

Tenant consents to electronic delivery of receipts and notices related to debits unless otherwise requested in writing.

Tenant and Landlord (Printed Names):

By:

Date:

Enter text✕
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What the Real Estate PAD Addendum Is

A Real Estate PAD (Pre-Authorized Debit) Addendum is a contract attachment that authorizes automatic withdrawals from a tenant’s or payer’s bank account for rent, fees, or other recurring real-estate-related payments. It specifies payee and payer details, bank account information, debit amount and frequency, start date, cancellation procedure, and consent language required under federal electronic signature law. Many landlords and property managers attach a PAD addendum to leases or management agreements to document payment authorization, provide auditability, and set clear terms for ACH or recurring card charges.

Why a PAD Addendum Matters for Property Payments

A PAD Addendum documents payer consent, reduces missed payments, and creates a clear record for dispute resolution. It clarifies timing, amounts, and revocation steps while supporting electronic execution under U.S. esignature law.

Why a PAD Addendum Matters for Property Payments

Who Typically Completes a PAD Addendum

Property managers, leasing agents, landlords, and tenants commonly complete Real Estate PAD Addenda to set up recurring rent or fee debits.

  • Property managers and landlords setting up recurring rent collections and reporting.
  • Tenants authorizing ACH debits for rent, utilities, or shared services.
  • Property management firms integrating payments into lease onboarding workflows.

Organizations use the addendum to standardize payment authorizations and maintain an auditable consent trail for accounting and compliance.

Step-by-step: Completing the PAD Addendum

Follow these steps to prepare, authorize, and store the addendum correctly.

  • 01
    Prepare Document: Attach to lease or payment agreement before onboarding.
  • 02
    Collect Bank Details: Request routing/account numbers and account type.
  • 03
    Obtain Consent: Have payer sign and confirm electronic-consent disclosure.
  • 04
    Record Retention: Store signed copy and audit trail securely.

How Electronic Submission and Processing Works

A PAD Addendum processed electronically follows a predictable flow from signature to bank authorization and recurring settlement.

  • Upload: Sender uploads the completed addendum for signature.
  • Sign: Payer signs electronically; audit trail is captured.
  • Transmit: Payments gateway or bank receives ACH debit instruction.
  • Settle: Bank posts recurring debits per stated schedule.

Configuring an Online PAD Addendum Workflow

Key settings help automate collection, authentication, and storage when you deploy the addendum digitally.

Field Configuration
Authentication Level Email link or SMS OTP per risk profile
Conditional Fields Show bank fields only if ACH selected
Reminders Automated reminders before scheduled debit
Storage Encrypted archive with access controls

Technical Requirements for eSubmission and Storage

Ensure your signing platform supports secure upload, authentication options, and export to standard formats.

  • File Formats: PDF, DOCX supported for templates
  • Integrations: Salesforce, NetSuite, Google Workspace, Procore
  • Authentication: Email link, SMS OTP, KBA options

Core Elements to Include in a Professional PAD Addendum

A complete addendum balances legal clarity with banking detail and consent language so payments proceed reliably and disputes are minimized.

Authorization Language

Clear, unambiguous consent wording that authorizes debits, specifies recipient, and explains how amounts and timing will be determined.

Bank Account Details

Routing number, account number, and account type with an explicit statement that the payer authorizes debits from the listed account.

Amount and Frequency

Define fixed amounts or a formula, set a repeating schedule, and specify start and optional end dates for withdrawals.

Cancellation and Notice

Describe the revocation process, required notice period, and any processing lag before cancellation takes effect.

Error Handling

Describe returned-debit handling, payer liability for fees, correction procedures, and timeline for dispute resolution.

Signature and Proof

Include signature block, printed names, entity titles if applicable, and an audit trail for electronic signatures.

Security and Compliance Features to Verify

Encryption: TLS 1.2/1.3; AES-256 at rest
Audit Trail: Timestamps, IP, action history
HIPAA BAA: BAA required for PHI
SOC 2: SOC 2 Type II available
21 CFR: 21 CFR Part 11 support
Access Controls: Role-based permissions and SSO

Key Risks and Financial Consequences

Returned Debit Fees: Bank fees and merchant penalties
1099/Reporting Penalties: Up to $330 or more per form
I-9 Paperwork Fines: $281–$2,789 per violation
Backup Withholding: 24% withholding for missing TIN
Breach Liability: Data exposure fines and claims
Invalid Consent: Revocation can halt collections

Key Processing Milestones for a PAD Addendum

Track milestones from offer through collection to ensure a compliant, auditable payment setup.

01

Document Drafted

Addendum prepared and attached to lease or agreement

02

Payer Review

Payer reviews bank details and consent language

03

Authorization Executed

Signed electronically or notarized where required

04

Recurring Debits Begin

Bank processes first debit per effective date

Timing Considerations to Note

Be explicit about effective dates and notice periods so parties understand when debits may start or stop.

Start Date:

Set as MM/DD/YYYY to avoid ambiguity

Notice of Change:

Require X days notice before amount or date changes

Cancellation Notice:

Define days required to stop future debits

Returned Item Window:

Specify timeframe for reclaiming returned funds

Record Access:

Confirm how signers can obtain signed copies

Real-world Examples of PAD Addendum Use

Two practical examples show how property professionals use PAD Addenda to speed payments and maintain compliance.

Martin Properties — Tim Martin

Martin Properties automated rent collection for multiple units to reduce late payments and in-person processing.

  • The change reduced manual posting by staff.
  • Tim Martin reports the platform provided compliant signatures and mobile support so tenants could authorize debits remotely, improving cash flow and reducing administrative overhead while preserving an audit trail for each transaction.

Optica Ventures — Brian Fitzgibbons

Optica used a PAD Addendum for recurring management fees tied to property performance.

  • Remote signatures simplified onboarding.
  • Brian Fitzgibbons noted that electronic execution made it easier for investors and tenants to consent, enabling timely collections and clearer reconciliation across accounts without needing in-person meetings.

Practical Tips for Accurate and Efficient PAD Execution

Follow established practices to reduce errors and bank returns when collecting PAD authorizations.

Use Clear Account Instructions
Provide examples of where to find routing and account numbers and verify them by requesting a pre-authorization micro-deposit or bank verification to reduce returned debits.
Confirm Identity
Match payer name to bank records and use multi-factor authentication for higher-risk authorizations to reduce fraud and disputes.
Record Consent
Keep a signed copy and a timestamped audit trail showing the consent disclosure and how the signer accessed it to support legal enforceability.
Test Before Scale
Pilot recurring debits with a small cohort, monitor returns, and adjust notice periods or authentication before wide rollout to avoid large-scale failures.

FAQs and Troubleshooting for PAD Addenda

Answers to frequent questions about authorization, revocation, bank returns, and legal enforceability of PAD Addenda.


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eSignature Vendor Pricing and Feature Snapshot

Compare common pricing and capability items across vendors relevant to executing PAD Addenda; signNow is listed first per vendor convention.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by vendor Varies by vendor Varies by vendor Varies by vendor
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No
Envelope Cap No cap 100 envelopes/user/year Varies Varies Varies
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