When you allow your tenants to pay the rent via bank check, you must prepare for the possibility that they may not have the funds in their account to cover it. Know what to do when the bank notifies you about insufficient funds so you can recover the money owed as soon as possible.
Here are the six steps to take when you discover an NSF check:
1. When you receive a returned check, the rental agent should immediately be notified by phone. The check will be returned saying that it was a NSF check, meaning there were non-sufficient funds.
2. You will be given the following information:

  • Amount of the return check
  • The resident’s name and address

3. The original check will be forwarded to you. At this time, the resident’s rent is delinquent, and it is important that you immediately serve him with:

  • 3-day notice to pay rent or quit (NPRQ)
  • A notice of the returned check form.

4. The resident should not be served any later than 12 hours from the time that you are notified of the NSF check.
5. Accept only money orders or certified checks. Never accept another personal check from the tenant. No receipt is necessary since they are simply replacing the NSF check. Also, no personal checks should be accepted for at least six months after a NSF check is received.
6. Charge the tenant an additional $75; that’s $25 for the returned check charge and $50 in late fees.

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