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.

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