Is it Illegal to Refuse Cash Payments for Rent?

The question of whether it is illegal to refuse to accept cash as payment came up in one of our classes recently. We found this to be an interesting question so we decided to do some digging to see if we could find a compelling answer.

According to the website for the United States Federal Reserve;
“There is, however, no Federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law which says otherwise.”
https://www.federalreserve.gov/faqs/currency_12772.htm

A non-lawyerly understanding may suggest that landlords, as private persons or businesses (if you operate as an LLC) can determine their own policies as to what they deem acceptable forms of payment. Let us take this moment to reiterate that clearly defining the terms and conditions of your lease and being consistent with all tenants is strongly advised.

But what about State Laws?

There are some States (for example California) which have laws mandating that landlords accept rent payments in cash. However, Colorado is not among them and has no such statue. In addition, the Colorado.gov website advises tenants to AVOID paying in cash if they can help it – even going so far as to state, “Never pay in cash when you can pay with a personal check or money order. If you must pay in cash, always get a receipt.”
https://www.colorado.gov/pacific/sites/default/files/Attachment%2010-Landord%20and%20Tenant%20Rights.pdf

Legal Tender for all Debts, Public Charges, Taxes, and Dues

Section 31 U.S.C. 5103 does assert, “United States coins and currency [including Federal reserve notes and circulating notes of Federal reserve banks and national banks] are legal tender for all debts, public charges, taxes, and dues.” Some take this to mean that landlords must accept rent payments in cash as rent may be considered a debt since the debtor, or tenant, cannot easily cancel the “recurring debt” or rent. Others feel that rent is not a debt since it is paid up-front each month and define a landlord as a creditor only when a tenant owns the landlord money, usually in the form of unpaid rent.
https://landlordselfhelp.com/media/2011_Bankruptcy.pdf

Conclusion?

While we feel that the best practice for landlords in the State of Colorado is to require rent be paid by certified funds or checks, we would like to remind you that legal questions are best answered by the professionals a.k.a. lawyers so please consult with one when determining your accepted methods of payment as well as any other terms and conditions in your lease.

Move-In Inspection Report

When we teach the Property Management Mastery class, we suggest you to use a written Move-In Inspection Report when your tenants move into the property. This is that form.

A special thank you to Brian Williams who shared his Move-In Inspection Report with our local investor club. The Move-In Inspection Report below is from him. Thank you Brian!

Here are images showing the newest version of the two page Move-In Inspection Report.

Read More

NC3 Scenario Variables

Yesterday I showed the variables you can use related to Accounts on the Nomad Calculator 3™. With these variables you can modify things like account balance and rate of return on the Accounts in each Scenario.

Today, I’ve added the ability for people to create Rules for modifying any of these variables at different points in your Scenarios for the Scenario itself.

While there are not that many, there are a few variables (like the ones shown below) that you may want to modify while modeling your investment portfolio. Eventually, I do plan on making additional capabilities for the calculator to allow you to use scenario-wide values to modify Accounts and Houses. Features like what I’ve added today and what I plan to add in the future will continue to improve your ability to model your own real estate and stock investing portfolios holistically plus it allows me to do even more sophisticated monte carlo simulations for the forthcoming videos, podcasts, blog posts and books I am writing.

Here are the variables you can modify Nomad Calculator 3™ for Scenarios.

Effective Income Tax Rate

This is your Effective Income Tax Rate for calculating how much tax you pay. If you enter in 19.4 you are saying you're paying 19.4% in income tax.

Inflation Rate

This is the rate of inflation for the entire Scenario. We use this to show what a dollar in the future is worth in today's dollars. We expect a value of 3.000 for 3% inflation rate.

Just liked with the Houses and Accounts, it is important to realize that these are primarily input variables and not all the variables that we store based on the output from Scenarios.