Source: Property Management for Dummies
              By Robert Griswold

Your 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 pending.

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 rental properties.

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This web page was updated on 02/26/2013.