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Can I be forced to use PayPal?

September 20, 2009|Martin Eichner, | Project Sentinel

Question: I just received a written notice from my property manager that from now on, my rent payments must be made through the PayPal Internet service. I have used PayPal for purchases, but can I be forced to use it for my rent payments? I prefer to pay by check.

Answer: The somewhat complicated rules on forms of rent payment are found in California Civil Code Section 1962.

To begin, the form of rent payment must be specified in the rental agreement. If you have a lease, a new method of payment -- such as PayPal -- cannot be added without your permission.

If you have a month-to-month agreement, a new method of payment can be added by serving you with a 30-day written change of terms, as long as that method is authorized in Section 1962. This statute includes electronic transfer of funds as a method of payment, but it is unclear whether it allows electronic transfer to an account not connected with a financial institution.

The statute was last amended in 2001, which means "financial institution" was probably intended to refer to a traditional bank. It is doubtful that the Legislature even contemplated online payments.

Even if the statute does authorize electronic transfer through the Internet, it still can be argued that it is unreasonable to require tenants to use PayPal as the exclusive means of rental payment. Such a requirement could be an undue burden on tenants who do not have Internet access or are not eligible for PayPal accounts.

We at Project Sentinel believe that a landlord's effort to require payment through the Internet as the exclusive form of payment -- without an accompanying procedure that would ensure all tenants could comply -- is not enforceable, absent a clearer authorization in Section 1962 to do so.

Rather than risk a notice for failure to pay rent based on a complex legal analysis, contact the landlord to resolve this issue and mention some of the problems that could arise from requiring Internet payment.

-- Martin Eichner, Project Sentinel

Eichner is director of Housing Counseling Programs for the Sunnyvale, Calif.-based mediation service. To submit a question, go to

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