When a Tenant’s Rent Check Bounces

By E-Renter Tenant Screening
Posted on March 2, 2010 under Landlord and Tenant FAQs, Rents and Deposits | icon: commentBe the First to Comment

iStock_000002845725XSmall1-200x300While some landlords avoid bounced checks by requiring cash or money orders from tenants, most still accept checks—and the risk that goes with that. Studies show that while the number of online payment options grows, the number of checks being written is declining. Still, plenty of folks pay their bills—including rent—with checks.

What are your options when a tenant’s check is returned by your bank?

Depending on the state in which you do business, writing a bad check can range from a misdemeanor to a felony. And, bad checks can be treated by law enforcement as a serious matter—or as a nuisance. Follow these steps to avoid the need to involve your local police or sheriff’s department.

  • The first thing most landlords do is to demand full payment from the tenant, including the amount of the check, plus a handling fee. Make sure this fee covers any bank charges for returned checks and your bookkeeping time.
  • Check your state and local laws to determine if there is a limit to the amount you can collect as a returned check fee. Some states allow for penalties and interest; others limit landlords to a flat fee.
  • Give your tenant a time limit to pay in full. Many landlords and property managers begin eviction proceedings if they have not collected the full amount due by the end of the time limit.
  • It is perfectly reasonable to require payment in the form of a money order or certified check—and to require subsequent rent be paid in the same way.
  • If you charge a late fee for late rent, remember your tenant will be responsible for that if they pay in full after the agreed-upon date. So add it to the total tab.
  • When drawing up lease and rental agreements, be sure to include a provision that covers your policy on returned checks. Include the compensation language, time limits, and late fees, and your requirements for money orders and/or certified checks.

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