COLLECTING BAD CHECKS

What if my tenant’s rental check bounces – NSF?

 Always make sure that your lease has a clause that addresses  a dishonored or bounced rent check, aka Non Sufficient Funds (NSF). This includes compensation for the bounced rent check and calls for a eviction for non payment of rent.  The purpose of a NSF lease provision is to reimburse you for charges that you will incur for negotiating the bounced check. The compensation should equal the amount your bank will charge you for the bounced check, plus whatever bookkeeping, administration and overhead costs are involved in dealing with the NSF.  Florida law does not take favorably to charging tenants with penalties . Therefore, you should not call this fee a penalty, but rather additional rent, as noted below. This NSF fee is also in addition to any applicable late fee.

 

If the tenant is still occupying the rental unit and it was a bounced rent check, i.e. NSF was for a rental payment, serve a 3-Day Notice for the rental amount still owed (& not a demand letter).  In the 3-Day Notice, the NSF service charges should be labeled as additional rent. Additionally, because the underlying rental obligation continues to exist, the tenant is also subject to the late charge in your lease (assuming the grace period for the rental payment has expired).

Of course, if a NSF check was given as payment in response to a 3-Day Notice (adding insult to injury), then the prior 3 – day Notice is still in effect since the NSF payment is not deemed a valid payment in connection to the Notice.

The following language is an abridged version of an Octazon Lease:

Dishonored checks will be subject to additional rent of 5% of the check amount or a $40.00 charge as additional rent, whichever is greater. All returned checks or dishonored checks shall all be deemed additional rent under the Lease and treated equally the same as rent. Failure to pay or reimburse Landlord all sums owed by Tenant, shall be considered a failure to pay rent and Landlord may include all such amounts of additional rent in any statutory notice to Tenant for payment of rent or to vacate Premises. The imposition of late fees and/or dishonored check charges is not a substitution or waiver of available Florida law remedies.

 

If you would like an Octazon’s custom lease prepared by an attorney, please email Mkatz@octazon.com

 

About Octazon:  Whether you own a few properties or hundreds of properties in Florida, Octazon Management, LLC is here to simplify property ownership and management. We can help you manage any and all of your properties.

When providing management services to Realtors, Octazon will NOT provide the leasing, rentals or sales – so you never have to worry about losing control of your relationship with the owner. 

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This BLOG is to provide helpful information and should not be considered legal advice

 

Posted by: marvinkatz on May 19, 2015