Can Santa Barbara Landlords Require Electronic Payments?

A new change to California's rent payment law took effect January 1, 2025, and it's one of those updates that's easy to miss until you're already on the wrong side of it. The core rule has been on the books for a while — you can't require tenants to pay only in cash or only by electronic transfer — but there's now an added wrinkle: you can no longer charge tenants a fee for paying by check.

What California Law Requires You to Accept as Payment

Under Civil Code § 1947.3, landlords must offer at least one payment option that is neither cash nor electronic funds transfer. In practice, that means paper checks. You can absolutely accept cash, Venmo, ACH, Zelle, or any other method alongside checks — but you cannot make one of the electronic-only or cash-only options the only way to pay.

Nothing in the law stops you and a tenant from mutually agreeing to pay by cash or EFT exclusively — the prohibition is on requiring it unilaterally. If a tenant wants to set up autopay and never write a check, that's fine. You just can't take checks off the table entirely.

The 2025 Update: No More Fees for Paying by Check

Effective January 1, 2025, Civil Code § 1947.3 now expressly prohibits landlords from charging tenants any fee for paying rent or a security deposit by paper check. If you've been passing along a processing fee for check payments, that practice needs to stop.

When You Can Legally Require Cash-Only Payment

If a tenant's check bounces due to insufficient funds, or if a tenant instructs their bank to stop payment on a check, you are legally permitted to require that the tenant pay in cash going forward — but only for up to three months from the date of the dishonored check.

This is a time-limited remedy, not a permanent one. After three months, the tenant's right to pay by check is restored.

You must give the tenant written notice that their check was dishonored and that cash payment will be required for a defined period (up to three months). A copy of the dishonored check must be attached to that notice.

If your rental agreement doesn't already contain language authorizing a cash-only requirement in the event of a bounced check, there's an additional step: you must also serve a Notice of Change of Terms of Tenancy under Civil Code § 827. That statute requires personal delivery to the resident. If you can't reach them at home or at work, you have two options — leave it with someone of "suitable age" at their home or workplace and mail a copy, or post it conspicuously on the property and mail a copy to the residence.

Using a 3-Day Notice Alongside a Cash Demand

A bounced check doesn't mean you're limited to just switching the tenant to cash. You can simultaneously serve a Three-Day Notice to Pay or Quit under the standard unlawful detainer framework. The cash demand and the pay-or-quit notice are separate tools, and the law expressly preserves your right to pursue both at the same time.

AB 1482 Units: One More Consideration

If the unit is covered by AB 1482's just cause eviction protections, the calculus gets more complicated once a Three-Day Notice expires without compliance. In that situation, don't move forward with termination without first consulting an attorney. The consequences of a procedural misstep in a just-cause-protected tenancy are significant enough that it's worth getting it right before taking action.

Audit Your Lease and Payment Policy Now

The practical checklist here is straightforward. Make sure your lease doesn't purport to require cash or EFT as the only payment option. If you're using a payment portal that charges convenience fees, confirm those fees apply only to EFT transactions and not to paper checks. If you ever need to go to cash-only after a bounced check, pull out the right notice form and attach the dishonored instrument before you serve it. These aren't complex requirements, but the details matter — especially if a tenant later challenges a notice or a subsequent eviction filing.

This post is for informational purposes only and does not constitute legal advice. Landlord-tenant law involves fact-specific analysis and changes frequently. Consult a licensed California attorney for guidance on your specific situation.

Want to make sure your leases, payment policies, and notice procedures are airtight? Learn more about how Sycamore Property Management can help.