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

Depending on the disorder in which you do business, writing a terrible check can range from a misdemeanor to a felony. And, terrible checks can be treated by law enforcement as a serious matter—or as a nuisance. Follow these steps to avoid the need to occupy 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 usage fee. Make sure this fee covers any bank charges for returned checks and your bookkeeping time.
• Check your disorder 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 tire tire fee.
• Give your tenant a time limit to pay in full. Many landlords and material goods managers start exile proceedings if they have not collected the full amount due by the end of the time limit.
• It is perfectly reasonable to demand payment in the form of a money order or certified check—and to demand 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.