If your landlord just asked you to change your payment method to something that you do not feel comfortable with (or are just not willing to do), you may be wondering whether such a request is allowed.
It’s a legitimate and important question.
In this article, I am gong to clearly answer that question as well as provide a step by step guide to figuring out whether your landlord can do this in your situation. I will discuss the legal landscape around this issue, including providing state law examples where appropriate.
If you don’t have the time to read through it all, here’s a short answer to the question:
As a general matter, a landlord may change the payment method so long as the lease agreement and state and local laws permit it. However, unilateral changes during the middle of the lease are usually not permitted. Landlords should give reasonable advance notice to allow tenants to make appropriate arrangements for the new payment method.
Ok let’s get into it.
The information contained in this post is for informational purposes only. It is not legal advice. You should seek the advice of a qualified legal professional before making any decisions relating to the topics covered by this article.
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What Does Your Lease Say?
The first place you should check is your rental agreement.
Most well drafted ones will include a provision that governs the manner and place for sending rental payments. Some will indicate multiple options and some will indicate that the landlord may insist on one option if certain events occur (such as using a certified check if a regular check bounces).
In most cases, the lease will govern this issue, so reviewing it is a critical first step. That being said, there may be state and local laws that also factor into the equation, so let’s take a look at those.
State and Local Laws on Payment Methods
In order to determine if a landlord’s request to change payment methods is legitimate, you should also review state and local laws relating to rent payments.
They will vary widely, so you will need to focus in on your specific jurisdiction to see what rules apply to you. In particular, some states have placed heightened attention on electronic payment methods due to their rising popularity. Let’s turn to that.
Can a Landlord Require Online or Digital Payment For Rent?
In California, a landlord must allow a tenant to pay rent using at least one method that is not cash and not electronic funds transfer, subject to certain exceptions (like a check bouncing).
So if they insist on changing the payment method so that only one of these options is allowed, that would be a violation of law. Source
Similarly, New York also prohibits online rental payments as the only payment method. Source.
In contrast, states like Texas adopt different position. Texas law is silent on how a tenant must pay their rent and doesn’t address any policies that a landlord might require when it comes to paying rent a certain way, like via electronic transfer or with a money order.
They defer to the terms of the lease agreement. But they clarify that if a landlord wants to insist on a new payment method, that may be considered an amendment to the lease, which can only occur at the beginning of a new lease period or with consent of both parties. Source.
Bottom Line: If your landlord is insisting on this method of payment to the exclusion of others, you should check your state and local laws or consult with an attorney to find out whether your situation is covered by any of these laws.
For your convenience, here’s our 50 state reference table (including D.C.) that will link you to the official landlord tenant laws of your state.
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Can a Landlord Require Rent Be Paid in Cash?
Similarly, there are state and local rules that govern the use of cash only as a rental payment method. Many landlords will insist on cash or cash equivalents like money orders or cashier’s checks because of the certainty that they will receive the value of the rent upon receipt.
A lot of times, landlords may insist on cash payment going forward if the tenant has overdrawn their regular checks in the past. So is this legal?
Well, as mentioned earlier, California prohibits requiring cash as the only payment option (except in limited cases where the tenant has bounced a check), while Texas presumably allows this, so long as it is not a change that is unilaterally imposed in the middle of a lease.
Again, state and local laws will vary on this point, so definitely worth checking your jurisdiction’s rules if you are not sure.
What Are Standard Rental Payment Methods?
When it comes to rental payments, there are a ton of options available to tenants (and landlords). But you may be asking – why does it matter? Why is it important to know these options?
Well, if you don’t like the direction your landlord is headed and are trying to come up with a reasonable response to your landlord’s request to change payment methods, you should be aware of all the options that are available.
To that end, I will explain what each option is and some of the pros and cons of that option. Armed with this, you should be better equipped to negotiate a good resolution that works for both of you.
This one’s popular for obvious reasons. Cash is king for many landlords because of its instant transfer of value and authenticity. Checks can bounce and fraud can abound with other payment methods, but cash is hard to counterfeit.
That being said, collection can be a hassle, especially if the landlord has multiple properties.
This is another popular option because almost everyone has access to a checking account and checks have been a tried and true form of payment for a long time.
But as mentioned earlier, checks can bounce and physical checks need to be mailed or otherwise delivered, which can create hassles on the collection side of things.
Certified or Cashier’s Check
Many landlords insist on certified checks because they tend to be more reliable and won’t bounce (unless there’s serious fraud at hand). But it’s a real hassle for tenants to get one every month and deliver it to the landlord.
It’s not perfect for landlords either because they still have to deal with the “check’s in the mail” excuse.
Online Bill Pay
Almost all banks and credit unions offer online bill pay these days, so many tenants use this as an easy and reliable form of rent payment to their landlords.
The nice thing is that it’s normally free. Plus payments can be set up automatically and the bank takes care of transmitting the funds to the landlord (either via mail with a paper check or ACH, if available)
Digital Payment Platforms or Wallets
I am sure you have heard of these digital payment solutions by now as they have been booming in popularity.
Venmo, Zelle, Paypal, Google Pay and Cash App are prominent options. Not be left out, the big mobile phone players have also entered the market with Apple Pay and Samsung Pay leading the way.
They are easy to sign up for and use. And in many cases it’s completely free for both parties. I think it’s a solid option for both tenants and landlords.
Specialized Landlord-Tenant Payment Platforms
As a landlord, this is my favorite option. And I am not alone – a lot of landlords opt for a specialized online solution for rental payments.
But it definitely holds big benefits for tenants as well.
It can set your payments on auto-pilot and you never have to worry about your landlord pestering you for the rent. Many of these platforms also allow you to pay with your checking account, debit card or even credit cards (although there is usually a fee for that).
Apartments.com and Zillow.com are both great options.
First off, they are free for both landlords and tenants. I use the Apartments.com and have had no issues. I like it because you can set your landlord account up for multiple rental properties and keep track of payment status for each one.
Now that you know the options available to you, try to work out a solution with our landlord that makes sense for both of you. You don’t have to be antagonistic, and in many cases, a landlord will be far more receptive to a logical and reasonable compromise than a stubborn and hostile refusal to meet in the middle.
So there you have it – a clear answer to whether your landlord can change payment methods and some tips on how to evaluate your options. Hope this has been helpful and happy renting!