Colorado's 'Free Payment Option' Rule: What Actually Satisfies It

The junk-fee article covers the headline rule: a payment-processing fee needs a free alternative or it’s prohibited. What actually counts as a qualifying “free option” is where landlords get tripped up in practice.

The requirement, precisely

A landlord can charge a payment-processing fee only if tenants also have at least one no-cost way to pay rent that’s reasonably available. If a portal charging a convenience fee is the only payment method offered, the fee isn’t legal — the landlord either has to absorb that cost or fold it into the advertised rent, not pass it through as an optional-in-name-only add-on.

What “reasonably available” is actually pointing at

The word doing the work here is reasonably — a free option that exists on paper but isn’t practical for a normal tenant to use doesn’t satisfy the requirement. A free option that requires an in-person visit to a leasing office open three hours a week, for a portfolio spread across a city, is a weaker case than an ACH bank-transfer option built into the same portal a card payment goes through.

Common setups and where they land

• Portal with card fee, portal ACH free — generally solid: the free option is right next to the paid one, equally convenient.
• Portal charges a fee for everything, mailed check accepted with no fee — workable if check-by-mail is genuinely practical for your tenants, but weaker than a same-portal free option.
• Portal is the only accepted method, and it always charges a fee — this is the setup the rule is written to stop.
• “Free” option requires cash only, at a specific office, specific hours — likely too restrictive to count as reasonably available for most tenant populations.

Absorbing the cost is also a valid answer

Nothing requires offering a fee-based option at all. A landlord can simply not charge a payment-processing fee — absorb the processing cost, or build it into rent — and the whole question becomes moot. For a small landlord with a handful of units, this is often simpler than standing up and maintaining a second payment channel.

What to check in your own payment setup

• If you charge any payment-processing fee, is there a truly free alternative — not just one that technically exists?
• Is the free option about as convenient as the fee-based one, or does it require extra friction (mail, in-person, limited hours)?
• Have you documented that the free option is actually offered and communicated to tenants, not just available if someone happens to ask?

The bottom line

“We offer a free option” only holds up if that option is genuinely usable, not a technicality. A Fee Compliance Check reviews your payment-fee structure against this standard alongside the broader junk-fee and late-fee rules.

LeaseCheck for Landlords is an educational lease-compliance screening tool. It is not a law firm and does not provide legal advice. Colorado rental laws change; confirm specifics for your situation with a licensed attorney.