Everything you need to know

+ How is an Obligo Billing Authorization different than a traditional deposit?

With a traditional deposit, the tenant pays a large sum in advance, before there’s any actual reason for charging such an amount. With an Obligo Billing Authorization, the tenant is only charged if and when the landlord has a claim.

+ How is an Obligo Billing Authorization similar to a standard deposit?
  • It’s usually the same size
  • It’s as good as cash from the landlord’s perspective
  • It gives the tenant an incentive to take good care of the apartment, because it’s the tenant who is required to pay if there’s a claim.
  • It enjoys the same legal protection. Money should not be claimed for fair wear and tear, and tenants can dispute claims exactly like they would with a cash deposit (e.g. small claims court)
+ When does an Obligo Billing Authorization expire?

Claims can be made up to 30 days after the lease-end date. This grace period is meant to allow sufficient time to assess the condition of the property before deciding on the final claimed amount. To avoid gaps in coverage, Obligo will always require confirmation from the landlord that the lease has ended and that it’s safe to release the authorization.

+ Do landlord go through a qualification process?

Yes. First, the will perform basic KYC (Know Your Customer) and AML (Anti Money Laundering) protocols, to ensure the legitimacy of the landlord and the associated legal entities.

In addition, Obligo will need to to know the landlord’s tenant screening criteria, as well as the landlord’s deposit deduction history, to make sure that they meet Obligo standards.

+ Do renters go through a qualification process?

To qualify for Obligo, renters will first need to meet the individual landlord’s screening criteria. In addition to meeting those criteria, Obligo will require that the renter provides authorization to one or more billing methods. Obligo usually requires both a credit card (not debit) and and American bank account.

Obligo will connect to your billing methods and run a series of tests to make sure that sufficient funds are available on them. During the sign up process, Obligo will never charge your billing methods, nor ‘lock’ your funds, nor influence your credit score in any way.

+ What if the terms of the lease change?

It’s easy to edit the billing authorization’s size, lease-start and lease-end dates. Some changes, such as an increase in billing authorization’s size, would naturally require the tenant’s consent.

+ Does Obligo require proof of damage before approving claims? How are disputes handled?

As a policy, Obligo does not take sides in disputes and plays no role in assessing the claim’s correctness or fairness. However, Obligo believes it is essential that tenants have a fair chance to dispute unreasonable claims.

While Obligo always pays the landlord for claims right away, tenants who intend to dispute claims may ask for their repayment to be deferred. Obligo’s intention is to provide sufficient time for tenants to either discuss the claim with their landlord or to formally dispute the claim.

Tenants have the legal right to dispute a claim and they may do so in accordance to local laws and practices, just like they would have been able to do with a normal deposit. In most states this can be done by filing a small claim through a small claims court.

Above all, Obligo encourages the landlord and tenant to communicate before any claim is made.

+ How does Obligo make money?

Obligo charges a monthly fee for each active billing authorization. The monthly fee depends on the size of the billing authorization, as well as on the risk profiles of both the landlord and the tenant.

Obligo can charge this cost from the landlord, the tenant, or a combination of both, depending on how the landlord wishes to set up the service.

Please contact our partnership team to inquire about our pricing.

+ What about Obligo’s credit risk? Who’s underwriting Obligo?

Obligo is audited by Ernst & Young and is backed by strong creditors who provide the credit facilities which backstop the tenants’ obligations as well as ours. Contact Us to learn more about how our landlords are secured.

+ Is Obligo a form of Insurance?

No, Obligo is not an insurance product but rather a credit product. If a landlord makes a claim, the landlord gets paid first, while the tenant can repay in installments.

+ What if the tenant simply can’t pay the claim?

Obligo always pays the landlord in full as soon as the claim is made, while the tenant is able to pay in installments. Obligo assumes the credit risk and suffers the loss if the tenant defaults on these installments.

+ What will my lenders or buyers think about Obligo?

With vacancies and concessions at an all time high and expected to rise further throughout 2019, the primary concern of multi-family lenders and buyers is your asset’s health. Using Obligo accelerates your lease up, drives vacancies and rent concessions downs while driving the rent roll and NOI up. This makes your asset more healthy which is great for your lenders and buyers.

Driving your rent roll and NOI up increases your property’s valuation, enabling you to sell at a higher price or get more refinancing out of it. In general, a larger refinancing deal is better for both you and your lenders.

Most lending banks require landlords to maintain the associated deposit accounts, including rental security deposit accounts, with the same bank. This has very little financial benefit for the bank: the security deposit accounts are labor intensive and make a negligible yield when compared to the underlying financing deal. Primarily, security deposit accounts provide banks with visibility into your assets health, and Obligo can provide the equivalent visibility if required.

If your lenders or buyers are yet unfamiliar with Obligo, our team would be delighted to present the business case to them.