This morning I was notified by my bank my tenants rent check bounced. This is the first time I've encountered this. After reading our lease agreement, my husband and I realize we need to add additional clauses.
For now, this is what we are going to do:
- Call tenant, notify her of the situation, write letter as well
- She'll be charged the late fee and bounced check fee
- Set-up an inspection to come an view the property this week
Questions for the BP community:
- How long can we need to legally give her to pay the rent?
- In the lease it states payment by: personal check, money order or cashier's check. Can we now require a money order or cashier's check only?
-What do need to do to protect ourselves in the case she does not pay-up? I noticed we did not state in the lease that failure to pay was grounds for termination, only a negative report to the credit bureau. She is almost nine months into her 48 month lease.
_ Any other advice would be much appreciated. We've been landlords for nearly 3 years. Our last tenant was "picture perfect" and we have had only one other issue with this tenant, a late rent check, but she notified us a week in advance that the check was going to be late and gave the late fee in advance.
I hope everyone is having a good day!
Well, if she pays the rent, you might not have grounds to terminate the lease unless of course it is month-to-month or at the end of the lease term. Most state/county laws I do not think would let you evict or end a lease in the middle of the term for late rent payment (assuming they do pay before eviction day).
I'm also unsure if you can refuse future payments via personal check. But next time you receive one, you could immediately call the bank on their check to verify that funds are there before (immediately) depositing.
When you talk to your tenants, see what they say. Don't be angry of course. If they've usually been good about paying, perhaps give them 3 days to pay. No more! If still no payment, waste no more time and go file for the first step in your area's eviction process.
a 48 month lease? That's a long contract. You can start the eviction process after a week, but if they've normally paid on time I'd just notify them and ask what happened and when they can pay in full, AND charge them a late fee (per your policy in the lease)
You should Contact an attorney and have them go over your lease, and also let you now what actions you can legally take.
First, don't panic. I know from personal experience that this is exactly what I did when it first happened to me. This is how I handled this situation. Communicate immediately in a form of an invoice that you'll expect the rent due, also whatever penalties and late fees your lease agreement allows. Set a deadline. If the deadline is not met, follow with a Notice Terminating Right of Occupancy. Most tenant's would react to this notice and pay up. But if they don't you have taken the first step that would lead you to file a formal eviction proceeding. I hope you don't have to go court, but be ready and protect your legal standing. I found out that one of our duties as property owners is to "educate" our tenants about the importance of rent first above all other financial concerns. Communication is key.
I don't think any financial institution will acknowledge a client's ability to cover a check over the phone anymore, at least where I live. They always cite privacy laws now. I have to physically go to the bank and try to cash the check to know if it clears. It saves me time anyway (I know immediately) and the NSF fee the bank would charge me if I had deposited it.
While it maybe a simple accident (I have had 1 bounced check ever. When I was a student my bank deducted the wrong amount from a prior check, then MY RENT CHECK bounced!) now would be a good time to sign up for a service like eRentpayments.com
Thank you everyone for your input. (Sorry for the delay, I was out of town and enjoyed being disconnected for a few days!)
Since my original post, the following has transpired:
1. Called the tenant to inform her of the bounced check.
2. Wrote a letter to her, stating the events that took place and sent her a copy of the documents I received from my bank, via certified letter. In the letter I requested this months rent paid by cashier's check or money order.
3. Spoke with client who states she was the victim of a fraud which has resulted in several overdraft charges. She and I talked about her plan of how to pay for Augusts rent and that this will most likely cause Septembers rent to be late too.
Yes, 48 a months is a long lease, but keeping the property occupied is important. I didn't panic, not in the financial sense. And I can carry this mortgage for about 5 more months without it dipping into my personal funds.
We have an inspection scheduled for this Friday to go view the property and check in with her. After our face-to-face and our assessment of the property, I may wave the late fee for Septembers rent. I understand things happen, and I've been on the other side before. As I stated before she has been a good tenant, late once before, but we were informed well before it was do and had her plan of action, which she followed to the T. I would like to give her the benefit of the doubt, but as they say, "fool me once, shame on you; fool me twice, it's all on me."
I like the idea of on-line, automated payments and will look into that.
Again, thank you for your responses.
As much as I understand the temptation to require cashiers checks or money orders after an incident, that would actually be an over reaction. Long leases are traps for both parties. If a landlord is a good landlord, a long lease is unnecessary to keeping a good tenant. The last time I was a tenant, I stayed 4 years on my month-to-month.
Elena, I am glad that the conversation with the tenant went well. Good luck in your future endeavors!
First of all, do not waive the bounced check fee. If it was the bank's error, even an identity theft, the bank will reimburse the late fee to the tenant. Your policy needs to be firm. And why should you cover the fee, it wasn't your fault.
You can now require the rent be paid with cash or electronic transfer because of the bounced check. You may not want to do that but I would at least remind the tenant that you would do that should another bounced check occur.
With a 4 year lease, I think regular inspections are a good idea. They may be a good idea in general but especially with long leases. This is a good opportunity
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