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If you are a landlord, you may have thought about accepting new forms of rent payment. It can help attract new tenants and get them to pay on time, leading to a better landlord-tenant relationship. Many landlords now accept payment through Zelle, Venmo, PayPal and other online services. Some may even accept cryptocurrency. This article provides guidance to landlords about the risks, and what the law requires, when it comes to rent payment options landlords may want to provide for tenants.

What are the most common forms of rent payment?

Cash, check, and money order are the traditional rent payment options. Many landlords, especially large ones, now accept electronic bank transfers. Online, money transfer services like Zelle, Venmo, and PayPal are also gaining popularity, especially with smaller landlords. 

In many places, you may require tenants to pay in cash, but check your local laws. In California, for example, landlords must offer at least one option other than cash or electronic transfer. So if you are a California landlord, you probably cannot require your tenant to pay solely in cash.

If your local laws allow you to require cash, it is a good idea to include the requirement in your Lease Agreement. If you do not, the tenant may have the right to pay by check, money order, or other common payment options.

If you want to change your payment requirements after you have a signed lease, you may need to convince the tenant to sign a Lease Amendment. Or, you may have to wait to change the payment method until the next lease renewal.

Can I require tenants to pay electronically or online?

In many places, landlords may require tenants to pay electronically through their banks or via online payment services. If you are going to require this method of payment, it is a good idea to spell it out in the Lease Agreement.

Some places, like California and New York, do not allow landlords to require electronic or online payments. Even if you include the requirement in your Lease Agreement, the law may allow your tenants to ignore it and pay by cash or check.

What are the pros and cons of accepting electronic or online payments?

Generally, both landlords and tenants see online or electronic payments as more convenient than paying by check or cash. The tenant does not have to drop off or mail a payment, and the landlord does not have to collect cash, issue receipts, and deposit payments. Automatic payments can also help tenants who may forget to pay their rent on time, or landlords who forget to deposit, or lose, rent checks. 

There are some downsides, however, like fees and processing policies. Additionally, unlike a cash or a money order, online or electronic payments can be reversed.

Most electronic payment services charge a fee, often around 3%, but it does vary. While you may be tempted to request tenants use a “friends and family” option to avoid these fees, this can be risky. Since this is usually designed for personal use (like when sending a friend money electronically after splitting the bill at dinner), these options come with less protections, and can often be reversed or canceled without much effort. Additionally, avoiding fees in this way may violate the terms of service for your payment processor.

It is important to know when tenants may be able to reverse their online or electronic payments. If the payment was made properly, reversing the charge usually requires the tenant contact their bank or the payment service and claim fraud or that they did not receive services they paid for. Payment services work these problems out in different ways, and they may not reverse the payment if the landlord shows proof the charges were proper.

If a tenant does reverse a payment improperly, you might have the right to treat it like a bounced check. This may allow you to charge a late rent fee and a returned payment fee as described in your Lease Agreement. If one of your tenant's payments was reversed, you may want to send them a Late Rent Notice. If the tenant needs more time to pay and you are willing to work with them, you may want to have them sign a Late Rent Payment Agreement.

Can I charge the electronic or online payment fees to my tenant?

You might want to consider including any fees for payment processing in your Lease Agreement. You may want to ask a lawyer or check your local laws for any limits. And don't forget that, depending on where the rental is, you might consider providing at least one rent payment option that does not include added fees.

In many cases, you may still be able to charge fees not covered in your Lease Agreement. For instance, your Lease Agreement might say tenants must pay by check or electronic bank transfer. If you accept online payments or credit cards, you might require the tenants to pay any additional fees for doing so.

Can landlords set up automatic payments for tenants?

Under most circumstances, you can set up an automatic payment system for tenants, and many tenants might prefer this option. It makes things easier for tenants because they do not have to worry about sending in a payment.

If you want to require your tenants to use automatic payments, however, you may want to include the requirement in your Lease Agreement. Otherwise, automatic payments can be provided as an option.

If your state or local government does not allow you to require electronic payments, you generally cannot require automatic payments since those are typically done electronically.

Can I accept cryptocurrency as rent payment?

Landlords are generally free to accept cryptocurrency as rent payment, though it may be complicated. But if your rental is in a state that does not allow you to require electronic payments, your state likely views cryptocurrency as an electronic payment. Even if you can require cryptocurrency payments under the law, you may have trouble finding tenants, or you might have to lower your rent because cryptocurrency isn't a common form of payment.

Cryptocurrency provides the convenience of electronic payments. Cryptocurrency payments generally cannot be reversed, either. If you invest in cryptocurrency, accepting rent in cryptocurrency can make this type of investing easier. 

However, the downside of accepting cryptocurrency in the form of rent payment is that its value can rise and fall dramatically. There is a chance that your cryptocurrency may lose value even if you quickly convert your rent payments into dollars. You might consider using a commercial payment service that automatically tracks conversion rates in real time. Without this type of tracking, it might be difficult to figure out the tenant’s cryptocurrency payment each month if your Lease Agreement sets the rent in dollars. Accepting crypto for rent can also create additional complexity to your taxes.

If you have more questions about rent payments or leasing issues, reach out to a Rocket Lawyer network attorney for affordable legal advice.

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.


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