TIP OF THE MONTH - HOW RENT IS PAID
Source: Property Management for Dummies
By Robert Griswold
lease or rental agreement should clearly indicate how rent is to be
paid: by cash, personal check, cashier’s check or money order.
Give your tenants a receipt for all money received, including checks.
For many rental property owners, the acceptance of checks is
routine. Most tenants have a personal checking account, and
paying by check is easy for them. Do not take post-dated checks in advance.
Often these checks are not good and the laws of many states consider a
post dated check a promissory note. You could actually be unable to
bring an eviction action for nonpayment of rent while the note is
Payment by check is conditional. If the check is not honored for
any reason, it is as if the tenant never paid and late charges and
returned check charges should apply.
Never accept second-party checks,
such as payroll or government checks. Have a policy that all rent
payments made after the grace period must be in the form of a cashier'’
check or money order.
CASH: Accepting cash attracts tenants that may be involved in illegal
businesses that deal primarily in cash. Good accounting practices
suggest that all of your income and expenses be clearly documented. The
Internal Revenue Service may become interested in auditing your rental
housing if they become aware of frequent cash transactions at your
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This web page was updated on 02/26/2013.