How should landlords handle bounced rent checks?

Handling Bounced Rent Checks in Missouri: A Guide for Landlords

As a landlord in Missouri, managing rent collection effectively is crucial to maintaining steady cash flow and positive tenant relationships. One common challenge you might face is dealing with bounced rent checks. When a tenant’s rent check bounces, it can disrupt your income and create administrative headaches. Understanding how to handle these situations properly, within the framework of Missouri law, can help you recover rent owed while minimizing conflict and potential legal issues.

Understanding Bounced Checks in Missouri

A bounced check, also known as a non-sufficient funds (NSF) check, occurs when the tenant’s bank refuses to honor the rent payment due to insufficient funds in the checking account or a closed account. In Missouri, there are specific regulations landlords should be aware of when addressing bounced rent checks.

Steps to Take When Rent Checks Bounce

1. Verify the Issue Quickly

• Contact your bank immediately upon receiving notification of a bounced check to confirm the reason.
• Notify the tenant promptly, in writing, that their rent payment did not clear.
• Provide the tenant with details such as the date of the bounced check, the amount, and any fees you may charge.

2. Review Lease Agreement and Missouri Statutes

• Check the lease agreement for provisions regarding bounced checks and late fees. Missouri landlords often include terms that specify consequences for returned checks, such as additional fees or penalties.
• Missouri law permits landlords to charge a reasonable fee for bounced checks. While there is no statewide statutory cap on NSF fees specifically for rent checks, fees should be reasonable and reflect your actual costs.
• Missouri Revised Statutes Chapter 537.600 addresses bad checks generally, which can be helpful in establishing your legal rights.

3. Charge a Returned Check Fee

• Many Missouri landlords include a returned check charge in their lease agreement, commonly ranging from $25 to $50.
• Ensure that this fee is clearly outlined in the lease and documented in any notices you send.
• The fee is intended to cover bank charges you incur and administrative time spent addressing the issue.

4. Request Immediate Payment

• Ask the tenant to remit the full rent amount plus the returned check fee promptly.
• Offer acceptable alternative payment methods such as cash, money order, or electronic payment to avoid further issues.

5. Provide Written Notice

• Send a written notice of nonpayment to the tenant, including:

- The amount due (original rent + fee). - Deadline to cure the bounced payment. - Consequences of failure to pay, including the potential for eviction.

• Missouri landlords often use certified mail or hand delivery for documentation purposes.

6. Consider Whether to Accept a Replacement Check

• Decide based on your experience with the tenant whether to accept a replacement personal check.
• To minimize risk, you might specify that replacement rent payments must be made by certified funds.
• You may limit acceptance to cashier’s checks, money orders, or electronic payments going forward.

Legal Remedies if the Tenant Does Not Cure the Bounced Check

1. Late Fees Under Missouri Law

• Missouri law allows landlords to charge late fees if tenants fail to pay rent on time.
• Lease terms typically specify the amount and timing of late fees.
• Late fees are separate from bounced check fees but may also apply once rent is overdue.

2. Eviction Proceedings (Forcible Entry and Detainer)

• If the tenant fails to cure the bounced rent payment within the time frame specified in your lease or notice, you may begin eviction proceedings.
• Under Missouri Revised Statutes Chapter 535, landlords can file for eviction based on nonpayment of rent.
• The process includes providing written notice to the tenant (often a 10-day pay or quit notice), filing a petition with the court, and appearing at a hearing.
• Note that eviction is a legal remedy of last resort and should be pursued only after clear communication attempts have failed.

3. Criminal Charges for Bad Checks

• Missouri law (RSMo 570.120) treats knowingly issuing bad checks as a crime under certain circumstances.
• While this is not a common route for rent collection disputes, it is an option for repeated or intentional bad checks.

Best Practices to Avoid Bounced Checks in the Future

• Screen Tenants Thoroughly: Check tenant credit and banking history when possible.
• Require Electronic Payments: Electronic transfers reduce the risk of bounced checks and improve payment traceability.
• Set Clear Lease Terms: Include specific language about bounced check fees and consequences.
• Communicate Promptly and Clearly: Early communication prevents misunderstandings and encourages timely payment.
• Maintain Professionalism: Treat bounced check situations as business matters to foster positive landlord-tenant relationships.

Sample Letter Template for Bounced Rent Check Notice

```
[Date]

[Tenant Name]
[Tenant Address]

Subject: Notice of Bounced Rent Check and Request for Payment

Dear [Tenant Name],

This letter is to inform you that the rent check you issued on [Date], in the amount of $[Amount], was returned unpaid by your bank due to insufficient funds.

As per your lease agreement and Missouri law, there is a returned check fee of $[Fee Amount], which, along with the original rent amount, is now due.

Please remit payment of the total amount of $[Amount + Fee] by [Due Date], using certified funds, money order, or electronic payment.

Failure to make this payment may result in additional late fees and could lead to eviction proceedings for nonpayment of rent.

If you have already made this payment or wish to discuss this matter, please contact me immediately at [Phone Number] or [Email Address].

Thank you for your prompt attention to this matter.

Sincerely,

[Landlord Name]
[Landlord Contact Information]
```

Conclusion

Handling bounced rent checks is an important operational aspect for Missouri landlords that requires prompt action, clear communication, and adherence to applicable laws. By verifying the issue quickly, charging reasonable fees, demanding timely payment, and using legal remedies when necessary, landlords can mitigate financial losses and maintain orderly property management. Establishing clear lease provisions and encouraging reliable payment methods will also reduce future occurrences, promoting a smoother rental experience for all parties involved.