Inherited Tenant Bounced Rent Check

13 Replies

Hi All,

This past September my wife and I purchased our first investment property with the help of BP. This is my first time posting and regrettably I have only been a lurker until now. The property we purchased is a duplex which we are occupying one side of. Prior to purchase the previous owner created a lease which terminates on 30 April 2018 so the current tenant could stay through the sale of the property. 

The tenant has paid on time (this month included) since October. I learned this morning that their check which was deposited on the 8th of this month (rent is due on the 5th) bounced for NSF. 

Can some experienced landlords/house-hackers give me your input as to how to handle this situation? I am in upstate New York so our laws allow for a 3 day Pay or Quit notice. Do I serve this today with a text/phone call or do I try a softer approach? Thanks in advance!!

@Mathew Cubell First I would have a conversation with the tenant and let them know you understand things happen but you need a certifids check (or cash if your ok with it) for the rent ASAP. See if your lease has a bounced fee charge and late fee and apply those as your lease allows. I might eve waive some of this for a first time offender. 

Start off nice and give them the opportunity to fix this.

Have you every bounced a check how would you like to be treated if this happened to you? Start there and then escalate if you don't get the results you need.

Personally, I would give 3 day notice with a follow up call/email letting them know that their check bounced. I would make sure to tell them that you understand mistakes happen, but the 3 day notice is a paperwork issue that you are obligated to post.

you can be nice, but still show you are operating as a business

Talk to them about giving you a money order or bank check for the funds quickly, say within 48hrs. 

Still serve the notice as a precaution. In the future I would only let them use those forms of payment.

I would take Andrew's approach. Issue the three day and apply all nsf and late fees as the lease specifies. 

There is a proper process to be followed and rules that serve a purpose. If you do not intend to follow them there is no point in having regulations or leases.

Congratulations on your house hack! The house hack is an awesome strategy.
Some of the best advice I have ever received was, ‘Follow your rules.’
The rule is that if rent is late the tenant gets a 3 day notice and all late fees are applied.
I have inherited over 2 dozen tenants in the past and have learned the hard way you have to follow your own predetermined rules.
We also put a clause in our lease that if you bounce a check we no longer accept your checks. That may not have been in the previous landlords lease.
Another great piece of advice I received; ‘It’s just business, remove the drama’.
Good luck!

@Mathew Cubell , If this is the first time and you are still building a landlord/tenant relationship with them, I would speak to them and see what they have to say. I would not immediately start eviction. 

You need to make sure they understand that this is not tolerated. Given it is the first time and there is a bit of a transition, I would let it slide this time (as long as they pay me immediately after/during conversation). If this EVER happens again, start eviction immediately to establish the fact that you do not tolerate this whatsoever. Life happens, but they already blew their "get out of jail card" within the first couple of months.

Thanks for all the feedback. I ended up opting to waive the fees since we don’t intend to renew their lease this April. I feel like bending on the rules is probably a bad a idea and I don’t intend to make a habit out of it but in this case it seems like the way to go. Thanks again for all the great feedback!

I would follow whatever is written in the lease. Follow your own rules and no one gets their feelings hurt. If your lease isn’t clear then make sure you get a new lease for your next tenant

I had a tenant not wanting to pay rent. So I posted an ad on cl renting the unit out, instructions were to knock on door and the non paying tenant would let you view property. Tenant starting paying. Probably not the best idea but it worked 1 time for me.

Franklin

I'm with @John Underwood . Talk to them first, remind them of your payment policy, and require a money order or cash from here on.

Do not let them kick the can down the road with excuses. If they can't get funds to you within 72 hours, file the 3-day Notice and start the eviction process.

Tenants get two warnings: the day they meet me and the day they pay late. After that, I consider them "educated" and they will be treated like every other late tenant.

Here is my take. 

Whenever I try the nice guy approach it works most of the time but I enforce it regardless. What I would do is simply go talk to the tenant and also give him the 3 day pay or quit noticed you need to see this as a business transaction. 

What I say is I understand we talked and came to a understanding (which should be that he pays in three days) I legally must give you this 3 day pay or quit notice in compliance with state law.

 Check your state laws as a bounced check may give you the right to collect the next three payments in cash. Also you may have other legal rights to collect the amount owed plus additional amounts.

You lose nothing by going soft first. I always try to talk with people. Be firm and see if you can get what you want ($).

Do what John Underwood said. Solid advise.  Next, move away from personal checks. Cozy.co for auto ACH or Zelle for person to person. Or at the least money orders or bank checks only. 

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