Q: I have a tenant who has paid in checks for the past two months. I have not had any trouble cashing the checks; however I prefer to have cash. Can I demand that the tenant pay me in cash?
A: No, you cannot demand the tenant pay you in cash solely because it is your preference.  

Q: My tenant paid me with me with a check on the 1st of January for rent. A few days later I tried to cash the check and was told there were insufficient funds. Can I demand that they pay the rent in cash?
A: Yes, when your tenant tries to pay you with a dishonored check you may demand a cash payment for the following three months from the date the check was dishonored if your lease or rental agreement provides for such cash payment.  

In order to demand a cash payment, you must serve the tenant with a notice in writing and provide a copy of the dishonored check.  If your lease or rental agreement is silent about dishonored checks, then you are required to provide and serve the tenant with a thirty-day notice of change in terms of tenancy for the notice to become effective.  For example, on January 1st your tenant gives you a rent check, on January 8th you try to cash the check and you cannot because of insufficient funds. Your lease is silent on how to deal with dishonored checks so on January 9th you give the tenant a thirty-day notice stating the check was dishonored and the tenant must pay the rent in cash for the next 3 months along with a copy of the check.  In this situation, the tenant could still pay their February rent by check because the 30 days has not expired. The tenant would then have to pay in cash for March, April, and May’s rent. [Use AOA’s form #138 – Notice for Rent to Be Paid in Cash Only] 

Q: My tenant wrote me a bad check for the first time this month. I want them to pay in cash for the next three months and charge them a $100 dishonored check fee. Can I charge them the $100 dishonored check fee?
A: No, you cannot charge them a $100 dishonored check fee. In order for the landlord to charge a returned check fee the lease or rental agreement must authorize the fee and the fee must be reasonable. A $100 dishonored check fee may be deemed unreasonable since fees are usually based on a reasonable estimate of costs the landlord will accrue as a result of a late payment. A reasonable amount would be the amount that the bank charges for a returned check plus the costs to the landlord because of the late payment.

In California there is a bad check statute that governs the amount that can be charged for a returned check. This allows landlords to collect a service charge instead of the dishonored check fee. Since this is the tenant’s first instance of writing a “bad” check, you can charge them up to $25 as a service charge, and $35 for each subsequent dishonored check.  

Q: My tenant has three children and rented an unfurnished unit. She is in a one-year lease. I know that there will be more items to repair than normal because of the children when they move out. I had the tenant pay $500 for a security deposit already. Can I increase her security deposit and have her pay me in cash for the security deposit increase?
A: Yes, you can raise her security deposit if the tenant is in a month to month agreement or the lease authorizes it and the total is less than or equal to two times the monthly rent. As a landlord, you must provide proper notice. Increasing the security deposit is a change in the terms of tenancy and requires a 30-day notice. Typically, a landlord cannot demand that a security deposit increase be paid in cash. The same rules that govern cash rental payments govern cash security deposits.  

Q: My tenant’s rent is due on the 1st and is considered late on the 2nd. It is now the 15th, meaning she is two weeks late.  In my lease it states that I can charge $100 per day the rent is late.  I want to charge her a late fee for each of the days she is late.
A: A rental agreement cannot include a predetermined late fee. However, there is an exception to this rule. When it would be difficult to determine the actual cost to the landlord caused by the late rent payment it may be reasonable for the fee to be predetermined. A late fee must be a reasonable estimate of costs that landlord will incur caused by the late rent. A late fee that is so high that it amounts to a penalty is not legally valid. It may be determined that your late fee of $100 for 15 days amounting to $1,500 is so high it will amount to a penalty and therefore will not be upheld. Typically, if a late fee is more than 6% of the rent it is considered to be a penalty and therefore invalid.  

Attorney Franco Simone, of the Landlords Legal Center and has been doing evictions for 20 years.  He is also an adjunct law professor at the University of San Diego.  Mr. Simone’s office is open Monday- Friday from 9:00 AM to 5:00 PM – Tel: 619-235-6180, website: www.landlordslegalcenter.com or email info@landlordslegalcenter.com