Electronic Rent Payments and New Law Related to Third Party Rent Payments

Recently, I represented some tenants who received a letter from their new landlord demanding that they pay rent electronically. Aside from the fact that this was a change in the terms in their tenancy requiring 30-days advance written notice, the landlord gave them one choice -- electronic payment only. 

However, under Cal. Civ. Code sec. 1947.3, if the rent checks aren't returned for insufficient funds in which case the landlord can demand cash payments, the landlord MUST offer another form of payment other than cash or electronic payment.

This same statute has recently been amended and enacted into law as of January 1, 2019 as it concerns rent payments made by third-parties [C.C.C. sec. 1947.3(3)] as follows:

(3) Subject to the limitations below, a landlord or a landlord’s agent shall allow a tenant to pay rent through a third party.

(A) A landlord or landlord’s agent is not required to accept the rent payment tendered by a third party unless the third party has provided to the landlord or landlord’s agent a signed acknowledgment stating that they are not currently a tenant of the premises for which the rent payment is being made and that acceptance of the rent payment does not create a new tenancy with the third party.

(B) Failure by a third party to provide the signed acknowledgment to the landlord or landlord’s agent shall void the obligation of a landlord or landlord’s agent to accept a tenant’s rent tendered by a third party.

(C) The landlord or landlord’s agent may, but is not required to, provide a form acknowledgment to be used by third parties, as provided for in subparagraph (A), provided however that a landlord shall accept as sufficient for compliance with subparagraph (A) an acknowledgment in substantially the following form:

I, [insert name of third party], state as follows:

I am not currently a tenant of the premises located at [insert address of premises].

I acknowledge that acceptance of the rent payment I am offering for the premises does not create a new tenancy.

(signature of third party) _____

(date)

(D) A landlord or landlord’s agent may require a signed acknowledgment for each rent payment made by the third party. A landlord or landlord’s agent and the third party may agree that one acknowledgment shall be sufficient for when the third party makes more than one rent payment during a period of time.

One of the issues that landlords fear is that by accepting rent from a third party, such as a parent, that a tenancy is also created. If the third party stops rent payments, rent payments would probably revert to the occupant of the rental unit and, if that person cannot make rent payments, then the landlord may issue a 3-Day Notice to Cure or to Quit [e.g. to pay rent or to move-out.] The landlord’s ability to evict the occupant may also be complicated by whomever executed the lease agreement. This new law clarifies that the third-party payer is not a tenant and acceptance of their rent check does not create a tenancy.

Interestingly, the lawmakers included a parting word as follows:

"A waiver of the provisions of this section is contrary to public policy, and is void and unenforceable."