Rent Collection Rules for LA Owners: Payment Methods, Late Fees and Receipts

For Owners · Rent & Compliance · October 2026 · 15 min read

A new tenant asks whether her father can send the rent from his own account. Another wants to pay in cash because his bank charges him for checks. A third pays late every month by two days and asks what the late fee actually is. None of these is a strange request, and California has a specific answer to each of them.

The answers sit in a short stretch of the Civil Code: section 1947.3 on how rent can be paid, section 1962 on what the lease has to say about paying it, section 1499 on receipts, section 1671 on late fees, and the newer section 1954.07 on reporting rent payments to credit bureaus. Add Code of Civil Procedure section 1161 for what happens when rent is not paid, and the City of Los Angeles rule on how much has to be owed before an eviction can start.

This guide walks through each one in the order an owner meets them: writing the lease, taking the payment, handling a late or missing payment.

Start with the lease: what Civil Code 1962 requires

Section 1962 applies to the owner of a residential rental and to anyone who signs the lease on the owner’s behalf. The lease itself has to disclose:

• The name, telephone number and usual street address for personal service of each person authorized to manage the premises, and of an owner or agent authorized to accept service of process and to receive notices and demands.
• The name, telephone number and address of the person or entity to whom rent is paid. If rent can be paid in person, the usual days and hours someone is available to take it.
• The form or forms in which rent is to be paid.

Instead of a payee’s address, the owner can choose to list a bank account the rent may be deposited into, with the name and street address of the bank, as long as the bank is within five miles of the rental. Or the lease can give the information needed to set up an electronic transfer.

The tenant gets a copy of the signed lease within 15 days of signing it, and another copy once a year on request, again within 15 days. With an oral agreement, the owner gives the tenant a written statement of the same information within 15 days. For the manager and service information only, section 1962.5 allows posting instead: a printed notice in every elevator and one other conspicuous place, or in at least two conspicuous places in a building without an elevator.

Buying a building with tenants in it

This part of 1962 matters most to a buyer. The information has to be kept current, and a successor owner or manager must comply within 15 days of taking over. A successor who does not comply cannot serve a three-day notice to pay rent or quit, or otherwise evict, for nonpayment of rent that accrued while they were out of compliance. The tenant still owes the rent. The owner just loses the eviction remedy for that period.

So on the day escrow closes, send every tenant a written statement with the new payee, address, phone number and accepted forms of payment. It costs a stamp and it protects the remedy you may need in month three.

If the person who signs leases for you does not comply, section 1962(d) treats that person as your agent for service, for performing your obligations, and for receiving rent. Rent paid to them may be paid in cash, by check, by money order or in any form you previously accepted, unless the lease specified the form or you told the tenant in writing that a form is unacceptable.

Payment methods: the one thing you must accept

Section 1947.3(a)(1) says a landlord must allow a tenant to pay rent and the security deposit by at least one form of payment that is neither cash nor electronic funds transfer.

The definition of electronic funds transfer in subdivision (d) is broad. It covers transfers through an automated clearinghouse, direct deposits and withdrawals, transfers started by phone or computer, transfers that deliver a paper instrument, and recurring transfers authorized in advance. A portal that pulls rent by ACH is an electronic transfer. So is a bank’s online bill pay, even when the bank mails a paper check on the tenant’s behalf.

That rules out two lease clauses:

• Portal only. A lease that requires every payment through an online portal or app fails 1947.3 if the portal only does electronic transfers. Offer the portal, and also accept a check or money order.
• Cash only. Cash is not the required alternative. A lease that takes only cash fails too.

Subdivision (e) allows the landlord and tenant to agree that rent may also be paid in cash or electronically, as long as another form of payment is authorized as well. A tenant cannot waive the rule. Subdivision (f) makes any waiver void.

Subdivision (b) adds one more line: you may not charge a tenant a fee for paying rent or the security deposit by check. Whether you can pass along a processing fee for a card payment through a portal is a separate question the statute does not answer directly, so have an attorney look at it before you put one in the lease.

Refusing cash

Nothing in 1947.3 makes you accept cash. A lease can say no cash, as long as a check or money order is accepted. If you do take cash, give a receipt every time (see below), and think about who in your operation is carrying it to the bank.

When you can require cash

There is one situation where you can demand cash as the only form of payment. Under 1947.3(a)(2), if the tenant has tried to pay with a check drawn on insufficient funds, or has told the bank to stop payment on a check, you can require cash for a period you choose of no more than three months.

To do it, give the tenant a written notice that says the payment instrument was dishonored and that the tenant must pay in cash for the period you set, not more than three months, and attach a copy of the dishonored check. If requiring cash changes the terms of the lease, the notice also has to follow Civil Code 827, the statute on changing the terms of a tenancy.

When the period ends, the normal rule comes back. You have to accept a check or money order again.

Money orders and cashier’s checks

Subdivision (c) says that issuing a money order or cashier’s check is direct evidence only that the instrument was issued. In other words, a tenant’s money order stub alone does not prove you received the money. Keep your own record of every instrument that comes in, with the date, amount and serial number.

Rent from someone other than the tenant

Section 1947.3(a)(3) requires a landlord to allow a tenant to pay rent through a third party: a parent, an employer, a charity, a friend. There is a protection built in for the owner. You do not have to accept the payment unless the third party gives you a signed acknowledgment stating that they are not currently a tenant of the unit and that your accepting the payment does not create a new tenancy with them.

You do not have to provide a form, but you must accept one that reads substantially like this:

You can require a signed acknowledgment with each payment, or agree with the third party that one acknowledgment covers a series of payments over a period. Keeping a blank copy of the form ready saves a back-and-forth.

Three limits come with the rule, in paragraphs (a)(3)(E) and (a)(4):

• It does not require you to sign up for a federal, state or local housing assistance program, including Section 8. Accepting a voucher is a separate question, covered in our Section 8 guide.
• It does not move the due date.
• It does not require you to accept rent offered after the three-day period in a notice to pay rent or quit has run out.

Paragraph (a)(4) also says the cash rule and the third-party rule neither expand nor shrink your right to end a tenancy.

Receipts

Civil Code 1499 is one sentence long: a debtor has a right to require from the creditor a written receipt for any property delivered in performance of the debtor’s obligation. A tenant paying rent is the debtor, so a tenant who asks for a receipt gets one.

For checks and portal payments, the bank record and the portal confirmation do most of the work. For cash and money orders, a receipt is the only clean record either side has. A receipt that shows the date, amount, unit, the period covered and how the payment was made is the record you will want if there is ever a dispute about what was paid and when.

Due dates, grace periods and late fees

When rent is due

Civil Code 1947 sets the default only where the lease is silent: rent is payable at the end of each period. Every written lease should override that with a due date, such as the first of the month.

Is there a grace period in California?

No state statute gives residential tenants a grace period before rent is late. The three days people have in mind is the three-day notice to pay rent or quit under Code of Civil Procedure 1161(2), and it counts three days excluding Saturdays, Sundays and judicial holidays. That is the time a tenant has to pay after being served, not a grace period before the rent is late. A lease can set its own grace period before a late fee applies.

Late fees and Civil Code 1671

This is the clause to get right. A late fee is a form of liquidated damages, an amount agreed in advance as the cost of a breach. Section 1671(c)(2) and (d) set a stricter rule for a lease of a dwelling than for a commercial contract. In a residential lease, a liquidated damages provision is void, except that the parties may agree on an amount presumed to be the damage sustained, when from the nature of the case it would be impracticable or extremely difficult to fix the actual damage.

The Appellate Division of the Los Angeles Superior Court applied that rule to a $50 rent late fee in Orozco v. Casimiro (2004) 121 Cal.App.4th Supp. 7. The court held the fee void and unenforceable because the landlord had not shown that his actual damages from late payment were impracticable or extremely difficult to fix. Quoting earlier authority, it said the amount must represent the result of a reasonable endeavor by the parties to estimate a fair average compensation for the loss. The court also said a landlord is not limited to interest as damages for a late payment, and may recover administrative costs reasonably related to collecting and accounting for it.

What that means for a lease:

• Set the fee from an honest estimate of what a late payment costs you: staff or manager time to follow up, bookkeeping, a bounced mortgage autopay, interest. Write that estimate down when you set the fee, and keep it.
• A fee picked because it sounds firm, or because another landlord uses it, is the kind of fee Orozco threw out.
• Be careful with fees that keep growing each day the rent is late. The question under 1671 is still whether the total is a reasonable estimate of the damage.
• Have a real estate attorney review the clause. The statute sets a standard, not a number, and no state law gives a safe dollar figure.

Adding a late fee, or any new charge, to an existing tenancy is a change in its terms. If the unit is rent-stabilized in Los Angeles, Culver City, Inglewood or Beverly Hills, check the city’s rules before you do it.

When rent is not paid

The three-day notice to pay rent or quit under CCP 1161(2) has to state the amount that is due and the name, telephone number and address of the person to whom rent is paid. If rent can be paid in person, it also states the usual days and hours that person is available. Instead of an address, it can give a bank account within five miles of the rental, or say that payment may be made through an electronic transfer procedure if one was already set up. The notice may be served at any time within one year after the rent became due.

Keep the notice to the rent itself. A demand that includes a late fee, a utility charge or any other amount invites a fight over whether the notice stated the amount due correctly. Our eviction process guide covers notice defects in more detail.

Two newer rules apply here:

• No fee for notices. CCP 1161(6), operative February 1, 2025, says a landlord or its agent shall not charge a tenant a fee for serving, posting or otherwise delivering any notice described in that section. That includes the three-day notice. Remove any “notice fee” or “posting fee” from your lease.
• The City of Los Angeles threshold. The Los Angeles Housing Department states that, effective March 27, 2023, landlords in the City of Los Angeles may not evict a tenant who falls behind on rent unless the tenant owes more than the Fair Market Rent for the unit’s bedroom size. The figure changes, so check LAHD’s current table before serving a notice on a City of LA unit.

In Inglewood, Culver City and Beverly Hills, nonpayment is an at-fault ground for ending a tenancy, with its own notice and filing steps. The city-by-city rules are in our guides to ending a tenancy in Inglewood, Culver City and Beverly Hills.

One more thing on accepting partial payment: section 1947.3 says the third-party rule does not require you to accept rent after the notice period expires. Whether accepting a partial payment after serving a notice affects the case is a question for your attorney before you deposit it.

Reporting on-time rent to a credit bureau

Civil Code 1954.07 took effect in 2025. Landlords it covers must offer every tenant on the lease the option of having positive rental payment information reported to at least one nationwide consumer reporting agency, or to an agency that furnishes the information to one. “Positive rental payment information” means complete, timely payments only. Missed or late payments are not part of it.

Who has to offer it

The section does not apply to a landlord of a residential rental building with 15 or fewer units, unless both of these are true:

• The landlord owns more than one residential rental building, of any size, and
• The landlord is a real estate investment trust, a corporation, or a limited liability company with at least one corporate member.

So an individual, a family trust, or an LLC owned by people (not by a corporation) that owns a fourplex and a duplex is outside it. A building with 16 or more units is covered whoever owns it. Assisted housing developments are excluded from 1954.07 and covered by a separate rule in section 1954.06. If you hold title through an entity, our guide on LLCs, trusts and title is worth reading next to this one.

Timing and the offer

For leases entered into on or after April 1, 2025, the offer is made when the lease is signed and at least once a year after that. For leases already in place on January 1, 2025, the first offer was due by April 1, 2025, then at least yearly. The offer can go by first-class mail or email; by mail, include a self-addressed stamped envelope for the reply.

The written election form must say that reporting is optional, name each reporting agency, state any fee, explain how to return the form, say the tenant may opt in at any time and may opt out at any time but cannot opt back in for at least six months, explain how to opt out, and include a signature block.

The fee

You may charge a tenant who opts in the lesser of your actual cost or $10 a month. If reporting costs you nothing, you charge nothing. A tenant’s failure to pay the fee cannot be a reason to end the tenancy, cannot come out of the security deposit, and cannot be reported to a credit bureau. If the fee is unpaid for 30 days or more, you may stop reporting, and the tenant cannot opt in again for six months. Rent payments cannot be applied to the fee, however the payment is labeled.

The section also protects repair-and-deduct and lawful withholding under sections 1941 to 1942: a deduction made under those sections is not a late payment for reporting purposes. That ties back to habitability, covered in our repair requests guide.

A rent collection checklist

• The lease names the payee, address, phone, days and hours (if paid in person), and the accepted forms of payment.
• At least one accepted form is neither cash nor electronic. No fee for paying by check.
• No lease clause waives 1947.3.
• A blank third-party acknowledgment form is on file.
• Receipts go out for cash and money orders, and on request for anything else.
• The late fee clause is backed by a written estimate of actual costs, and an attorney has reviewed it.
• No notice, posting or service fee anywhere in the lease.
• Three-day notices demand rent only.
• After buying a building, tenants get the new 1962 information within 15 days.
• If 1954.07 applies to you, the credit reporting offer goes out at signing and once a year.

Rent collection is one of the two core pieces of our flat fee management, alongside maintenance coordination. For a broader view of the month, see what a property manager does each month.

Questions owners ask

Can I require tenants to pay only through an online portal?

Not if the portal only takes electronic transfers. Civil Code 1947.3 requires at least one accepted form of payment that is neither cash nor an electronic transfer. Offer the portal and also accept a check or money order.

Can I refuse to take cash?

Yes. The statute requires a non-cash, non-electronic option, not cash. A lease can exclude cash as long as checks or money orders are accepted.

A tenant’s check bounced. What can I do?

You can require cash only for up to three months, by giving a written notice that the check was dishonored, stating the cash period, and attaching a copy of the check. If that changes the lease terms, the notice must also follow Civil Code 827. After the period ends, you accept checks again.

The tenant’s mother wants to pay the rent. Do I have to take it?

Yes, once she gives you a signed acknowledgment that she is not a tenant of the unit and that your accepting the payment does not create a new tenancy. Without the acknowledgment, you are not required to accept it.

How much can I charge as a late fee?

California sets no dollar figure. Under Civil Code 1671, a residential late fee is void unless your actual damages from late payment would be impracticable or extremely difficult to fix and the fee is a reasonable estimate of them. Base it on a written estimate of your real costs and have an attorney review the clause.

I own one fourplex in my own name. Do I have to offer credit reporting?

No. Section 1954.07 excludes buildings of 15 or fewer units unless the landlord owns more than one rental building and is a REIT, a corporation or an LLC with a corporate member. A building of 16 or more units is covered.

Sources and disclaimer. California Civil Code sections 827, 1499, 1671, 1947, 1947.3, 1954.06, 1954.07, 1962 and 1962.5, and Code of Civil Procedure section 1161, read from the text published by the California Legislature as reproduced at California.Public.Law; Orozco v. Casimiro (2004) 121 Cal.App.4th Supp. 7 (App. Div., L.A. Super. Ct.); Los Angeles Housing Department, LA Renter Protections Notification (nonpayment threshold effective March 27, 2023). Current as of October 2026. This article is general information for property owners from a California DRE-licensed property management company, not legal advice. Statutes, case law and local ordinances change, so confirm your lease terms, late fee clause and any notice with a real estate attorney, and any tax treatment of fees with your CPA.