california residential-lease rent banking
Can landlord require me to pay rent through ACH?
<p>I'm undecided as to whether this question belongs here on in the Money &amp; Personal Finance SE, so apologies in advance if it should be migrated.</p>

<p>I'm facing a situation where my landlord had previously collected rent through an online service, in which I had to initiate the payment each month and specify the amount.  That service has since been discontinued.  As a result, the landlord is now asking all tenants to sign a modification to the lease agreement that specifies two actions:</p>

<ul>
<li>The ownership of the rental property has changed names to a different LLC.</li>
<li>The rent will be collected through automatic monthly ACH payments from a bank account that I would furnish.  This form authorizes the LLC to withdraw funds from my account as determined by my rental agreement and any future addenda to this agreement, until I move out.</li>
</ul>

<p>My first question is not so much a legal one, but a plea for advice:  <strong>is this something I need to worry about?</strong>  If I agree to these terms, would I be exposing myself to financial risk?</p>

<p>Second, is this type of contract legally enforceable under California housing law?  I know I haven't provided the verbatim wording or additional details (mainly to preserve some sense of anonymity), but this whole thing smells fishy to me and I cannot imagine how an arrangement in which a landlord has <strong>direct access</strong> to my bank account is permissible as a condition of rental.</p>

<p>I am not able to move on such short notice.  For the previous month, I wrote them a check, and it went through, so their request isn't out of an absolute need to have this arrangement, but it appears to be for their convenience.  For what it's worth, the property owners have been very gracious to me and we get along extremely well, but I have learned not to confuse the personal with the professional.  This whole thing smells to me.</p>

<hr>

<p><strong>Update:</strong>  I spoke to my bank and was informed that by signing the ACH authorization form, I would be giving my landlord complete access to funds in my checking account.  The representative told me that they would not need subsequent authorizations.  It's similar to scheduling automatic payment of utility bills, but this is obviously unacceptable to me for such large transactions on an account where I get my paycheck deposited.</p>

<p>While it is true that my account number and the bank routing number are printed on paper checks, the critical difference is that I have to <em>sign</em> each check I write, and that instrument can only be used once.  The form I am being asked to sign permits repeated withdrawals without further intervention on my part.</p>

<p>I have also found the relevant portion of California law, in <a href="http://www.leginfo.ca.gov/cgi-bin/displaycode?section=civ&amp;group=01001-02000&amp;file=1940-1954.1" rel="nofollow">Civil Code Section 1947.3</a>.  Because I have never been delinquent/late in paying rent, I not obligated to sign this request, nor can the landlord force me to sign it as a condition of remaining on this property.  Moreover, <strong>I would tolerate paying in cash if necessary despite the monthly inconvenience</strong>, as the issue is about control of my funds.  But in the meantime, I will try to negotiate some other arrangement.  I've also discovered that I've been <strong>overpaying</strong> my rent for the last 8 months.</p>

<p>As noted in your update, <a href="http://www.leginfo.ca.gov/cgi-bin/displaycode?section=civ&amp;group=01001-02000&amp;file=1940-1954.1" rel="nofollow">Cal. Civ. Code section 1947.3</a> says</p>

<blockquote>
  <p>(a) (1) Except as provided in paragraph (2), a landlord or
  a landlord's agent shall allow a tenant to pay rent and deposit of
  security by at least one form of payment that is neither cash nor
  electronic funds transfer.</p>
</blockquote>

<p>Paragraph 2 related to cases of recent bounced checks, and it sounds like you don't have that problem.</p>

<p>From the personal finance angle, if you liked the convenience of the online service but don't trust the new ACH agent, your bank may have an "online bill pay" service where they can withdraw money at a designated time each month and send it. Chase has such a service, no charge, they do an electronic transfer if the payee accepts them and otherwise mail a paper check.</p>
