Tenant Writes Bad Check

As a property manager or owner you receive rent checks every month and for the most part have had no problems.  Until now, this month you receive a bounced check. You find yourself squirming with fear and agitation at the thought of a bounced rent check then having to turn to the renter in an attempt to recoup the funds.
Your first step should be in completing adequate tenant screening to ensure this is not a habit, but one of an error of kinds. Mistakes do happen.  Secondly, add to your lease agreement a NSF fee for any returned bad checks and for all rents and fees from that time on must be paid with guaranteed funds cash or money order. We recommend around $25.00 NSF fee in addition, to late fees or other bank fees. The bank will then charge their NSF in addition to the cost of the check.
Okay, you have your bases covered now what?
First, contact the bank asking for the check to be run through again. Most banks run non-sufficient fund checks twice but it doesn’t hurt to ask for clarification. Then, contact the renter as this could be a simple error and payment is a phone call away. Also, collect this rent in cash and demand the NSF fee stated in your lease be included. Don’t back down, enforce your lease.
If the funds are still not in the account and your tenant isn’t cooperating, take the check to the bank of the renter. Present the check to the cashier asking how much they can cash the check for. Suppose the renter wrote the check for $600 but the account has only $400. You can request the $400 for payment of the check. Banks aren’t wild about doing this, but will if you insist on payment. There is a risk in doing this, as the renter may add more funds to the account and you will miss collecting them and receiving payment in this manner is perceived as payment in full for the check.
Another way to collect funds is called “Submitting a Collection Item”. Tellers may not be aware of this process so you will need to speak to the bank manager. There is a fee for this service usually around $15.00. The process is done like this. When you hold a check for collection, much like the process the banks do, you are given top priority for any funds that may be added to the account.
Suppose, just enough funds are added to the account to cover a check for a smaller amount, the bank will not pay that check but will hold all the funds in the account until the full amount of your check is collected and you are paid. Any remaining funds will then be applied to subsequent checks. Many banks notify the account holder their account is being held for collection, but most frequently, renters don’t know until after the fact, and after subsequent checks have bounced.

For additional information on this and other renting articles please visit our web site at http://www.mrpmrentals.com/

Mountain Ridge Property Management

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