# Bounced Checks from Tenants



## mrcheap (Apr 4, 2009)

I got my first bounced check from a tenant this month <sigh>. Any advice from landlords on the forum of the best way to handle it?


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## Rico (Jan 27, 2011)

For starters, what's in your rental agreement regarding insufficient funds, penalties, and late fees for such?

Beyond that, communication is key - don't assume anything until you've spoken to them about it and go from there.


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## Berubeland (Sep 6, 2009)

Hi Mr Cheap, 

1 - Make up an N-4 and mail it. Allow 5 days for service
2- Call them and tell them their check bounced
3 - Make arrangements for email money transfer
4- Lets assume they pay when they get their notice they'll be a little freaked out tell them that you had to start the legal process to protect yourself. 

Or you could do #2 then #1 but that's only if you're not a B#%$h like me


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## Berubeland (Sep 6, 2009)

If you need anything let me know  including an N-4 just let me know.


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## houska (Feb 6, 2010)

Berubeland said:


> Hi Mr Cheap,
> 
> 1 - Make up an N-4 and mail it. Allow 5 days for service
> 2- Call them and tell them their check bounced
> ...


Look, I respect Berubeland's advice as that of a professional landlord with experience with both good and bad tenants. However, I'd strongly advise #2 (talk to the tenant) before #1, unless you have a strong suspicion that you have a deadbeat on hands. You may not need to do #1 at all.

The fact of the matter is that like it or not, a tenant-landlord relationship is based on a foundation of trust and goodwill. A bounced check of course erodes that, but you need to weigh whether the further erosion you will cause through jumping straight to "legalese" is worth the benefit.

I've been a tenant who accidentally bounced a rent cheque (bank error depositing my pay). I've also been inaccurately accused of not paying rent when the landlord was looking in the wrong account. And as a landlord, I've gotten an NSF from a student tenant who was better at her studies than at chequebook management. In all those cases, a quick informal conversation dealt with the issue promptly, and in a way that rebuilt trust rather than eroded it further. And that trust pays off when lease renewal or vacating the premises comes around after the lease.

Now Berubeland has written eloquently and frighteningly  about deadbeats, accidental and "professional deadbeats" as well. Clearly her advice works much better in that instance. But I'd ask whether you have any reason to believe that is the situation before jumping to that type of action...


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## financialnoob (Feb 26, 2011)

houska said:


> Look, I respect Berubeland's advice as that of a professional landlord with experience with both good and bad tenants. However, I'd strongly advise #2 (talk to the tenant) before #1, unless you have a strong suspicion that you have a deadbeat on hands. You may not need to do #1 at all.
> 
> The fact of the matter is that like it or not, a tenant-landlord relationship is based on a foundation of trust and goodwill. A bounced check of course erodes that, but you need to weigh whether the further erosion you will cause through jumping straight to "legalese" is worth the benefit.
> 
> ...


I don't see why you can't mail the N4 AND talk to the tenant. In fact, do them both at the same time and hand-deliver the N4. Then you don't have to add on 5 days to the process. It can take 3 to 4 months to evict a tenant who won't pay you. It's now the 9th of March. Waiting a few extra days to try and resolve matters diplomatically puts another month's potential rent at risk.

It's best to have the N4 on record in case it happens again. The N4 doesn't mean you have to evict the tenant. It is just the first step in a looooooooong process. And there are instances where multiple N4s for NSF cheques are grounds for applications to force the tenant to pay by money order or certified cheque or other guaranteed way.

Think of it like a minor traffic accident with a little damage and the person who hit you trying to convince you not to log it with your insurance company. You can take your chances that he's a nice guy, but more often than not, you're going to get taken advantage of. Better to get the guy's insurance info just in case. Doesn't mean you have to use it, but better than a leap of faith.


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## Albion Boris (Mar 6, 2011)

Their attorney does not represent you, he represents them. Your wages may be nondischargeable under a fraud theory, if the employer knowingly wrote you bad checks. You should consult with an attorney. Not THEIR attorney - your own. You may not have much time; do it soon.


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## Sampson (Apr 3, 2009)

Interesting discussion.

I can see and agree with both Berubeland and houaka's points, the first from a perspective of a pure professional, and the second from a 'mom & pop' landlord.

I'm sure Berubeland has so many tenants to deal with her approach is most prudent in most situations, it removes the 'human' element from the tenant-landlord equation. However, as houska points out, if you own only a single rental unit, then building a relationship, including trust with your tenant can be critical.

In Cheap's position, I would talk to the tenant first, and let them know you intend on filing the N4. Maybe you get a new cheque within a few days. Really depends on your original selection criteria and what type of tenant you have and how much you trust them.

Good luck, and let us know how it turns out.


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## Jungle (Feb 17, 2010)

I would speak to them in person with the n4 in the back pocket. See what the situation is before serving n4.


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## Four Pillars (Apr 5, 2009)

I'd do what Rachelle says.

If you miss a mortgage payment, does the bank call you to find out if you are ok before starting their "missed payment" procedures?


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## K-133 (Apr 30, 2010)

Four Pillars said:


> I'd do what Rachelle says.
> 
> If you miss a mortgage payment, does the bank call you to find out if you are ok before starting their "missed payment" procedures?


I understand this.



> I would speak to them in person with the n4 in the back pocket. See what the situation is before serving n4.


But depending on the history of the tenants, this makes more sense.

Maintaining a positive relationship would have me call with the N4 all but mailed out, and then serve the N4. I'd let them know that the N4 is a formality that you are required to follow through with.


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## Four Pillars (Apr 5, 2009)

K-133 said:


> I understand this.
> 
> 
> 
> ...


Fair enough. I guess it depends on the tenant. For a tenant who has been there a while (more than one year?), perhaps it makes more sense to get the N4 ready, but make the phone call first.

I was talking to Mr. Cheap recently and I know that this tenant hasn't been there all that long.


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## Cal (Jun 17, 2009)

Great advice Bereubeland....

Personally I would do #2 first...and if there is any hestitation on the tenants part, or any problems, I would have #1 in the mail same day.


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## I'm Howard (Oct 13, 2010)

I thought it was Body Check and Bounced Cheque??


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## iherald (Apr 18, 2009)

I'm Howard said:


> I thought it was Body Check and Bounced Cheque??


A friend of mine played on the Harvard MBA inter-mural hockey team. Their jerseys said "Our Checks Don't Bounce". I thought it was pretty funny.


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## mrcheap (Apr 4, 2009)

Thanks all for the amazing advice! You convinced me to call her instead of e-mailing (which in retrospect was definitely the right move, more personal). 

She apologized and agreed to immediately e-mail the funds (I walked her through how to do so on the bank website) and I have the funds in hand.

I was going to go hand-deliver the N4 tomorrow if I couldn't reach her or she didn't make prompt payment (as in, today). I settled on a #2 immediately followed fast by a #1 (this is starting to sound like toilet humour, my apologies ;-P) which turned out to be unnecessary.

Thanks again!!!

BTW - check vs. cheque: http://www.canada-esl.com/lessonsmain/cheque.html (I tend to personally use them interchangeably as I do business with both Canadians and Americans).


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