Rent Collection Systems and Best Practices

Make an ACH bank transfer (an electronic payment from the tenant's bank account to yours) through a rent portal or your bank the default way to pay: most ACH payments settle within one banking day, and each one leaves a dated record. Keep at least one non-electronic option where state law requires it, such as California and Virginia, and set late fees inside your state's limits: Texas presumes a fee of up to 12% of the rent reasonable in buildings of four or fewer units once rent has gone unpaid for two full days, while New York caps the fee at $50 or 5%, whichever is less. When rent is late, follow a dated timeline that ends in your state's formal notice, served exactly as the statute requires.

Which payment methods to offer

State rules on how you collect

• California: you cannot require rent in cash or by electronic transfer alone; you must allow another form, such as a personal check, money order, or cashier's check, and since 2025 you cannot charge a fee for paying by check. After a tenant's check bounces, you may require cash for up to three months, but only after giving written notice with a copy of the returned check; if that changes the rental agreement, the normal advance notice for a change applies before it takes effect.
• New York: give a written receipt for rent paid in cash, by money order, or by anything other than the tenant's personal check, and for personal checks too once the tenant asks in writing. Keep cash receipt records for at least three years.
• Texas: you must accept timely cash rent unless the written lease requires a check, money order, or other traceable payment. For each cash payment, give a written receipt and record the date and amount in a record book.
• Virginia: you must accept rent and deposits by check and money order, and give a written receipt for every cash or money order payment.

Late fees: caps and grace periods

On $1,600 monthly rent, the most a Texas landlord with a fourplex can charge under the presumption is $192 (12%). A New York landlord can charge $50, because 5% would be $80. In Virginia, if the tenant has paid $1,000 and owes $600, the cap is $60, which is 10% of the balance and less than the $160 that 10% of the rent would allow. A Texas landlord who collects an improper late fee owes the tenant $100 plus three times the fee, plus attorney's fees.

A late-rent timeline that ends in a valid notice

1. Due date: check which payments arrived and send a written reminder for any that failed or did not come in.
2. After the grace period: charge the late fee only if the written lease provides for it and only within your state's cap.
3. New York, day 6: if rent has not been received within five days of the due date, send the tenant a written notice by certified mail saying so. If you skip it, the tenant can use that failure as a defense in a nonpayment case.
4. Payment plan: if the tenant offers part of the rent, any deal should be a signed agreement stating the amount paid, the date the balance is due, any late fee, and that you will not start an eviction if the balance arrives by that date.
5. Formal notice: serve your state's notice, with the exact content and delivery method the law requires.

• Federal 30-day notice. If the property has a mortgage owned by Fannie Mae or Freddie Mac or insured or guaranteed by FHA, VA, or USDA, or the unit is in a federal housing program such as Housing Choice Vouchers, most courts have held that the CARES Act still requires 30 days' notice to vacate before you can require the tenant to leave for nonpayment. In Texas, you may file after the state notice runs, but the writ of possession (the court order that authorizes removal) cannot be served until 30 days have passed since the notice.
• Partial payments after a notice. In Florida, accepting part of the rent after the notice does not waive your rights if you give a dated receipt showing the balance and when it is due, or serve a new 3-day notice for the balance. In California, you may refuse a partial payment; if you accept the full past-due rent after the notice period ends, you give up the right to evict for that late payment.

If the notice period ends without payment, the next step is a court filing, covered in the eviction process guide. For tenants who pay late every month, dealing with difficult tenants covers the written-warning steps that come before a non-renewal.

Keep records that hold up

Keep a ledger for each tenant with the date, amount, method, and rental period of every payment, plus copies of receipts, reminders, and notices with proof of how and when each was delivered. Accounting for landlords covers how to set up the ledger, and self-managing vs hiring a property manager compares handing collection to a manager.