How should landlords handle bounced rent checks?

Handling Bounced Rent Checks for Landlords in South Carolina

In South Carolina, landlords must manage bounced rent checks carefully to maintain healthy tenant relationships and comply with state laws. Rent payment issues, such as dishonored checks, can disrupt cash flow and create legal complications if not addressed promptly and properly. This guide offers a clear, step-by-step approach for South Carolina landlords on how to handle bounced rent checks effectively.

---

Understanding Bounced Checks in South Carolina

A bounced check, also known as a returned check or NSF (non-sufficient funds) check, occurs when a tenant's bank refuses to honor the payment due to insufficient funds or other banking issues. In South Carolina, there is no specific statute directly addressing bounced checks in residential landlord-tenant relationships, so general contract and banking laws, combined with landlord-tenant regulations, guide how landlords should proceed.

---

Immediate Steps to Take When a Rent Check Bounces

1. Confirm the Check Has Bounced

• Verify with your bank that the check was indeed returned unpaid.
• Obtain documentation or a copy of the bank notice showing the check was dishonored.

2. Notify the Tenant Promptly

• Contact the tenant as soon as you are aware of the bounced check.
• Communication can be via phone, email, or certified letter for recordkeeping.
• Inform the tenant about the bounced check, the amount owed, and any associated fees.

3. Request Payment in a Different Form

• Ask the tenant to pay the rent amount immediately using a certified check, money order, or electronic payment to ensure funds are available.
• Request payment of any bank fees or penalties that resulted from the bounced check, if your lease agreement allows.

---

South Carolina Laws Regarding Bounced Checks and Fees

While South Carolina law does not explicitly limit the fees landlords may charge for bounced checks in residential leases, any fees must generally be reasonable and specified in the lease agreement.

• Reasonable Fees: Lease agreements often include a provision allowing landlords to charge a returned check fee—typically ranging from $25 to $50.
• Notice of Fees: It’s best practice to inform tenants clearly in the lease about returned check fees.
• Additional Charges: Late fees may also be applicable if the bounced check causes rent to be late, subject to the lease and South Carolina regulations.

---

Handling Repeated Bounced Checks

Multiple bounced checks may indicate a tenant’s financial instability or unwillingness to comply with lease terms. Consider these steps:

• Require Certified Payments: After a bounced check, you may require future rent payments in guaranteed funds (cash, money order, certified check).
• Document Each Incident: Keep detailed records of every bounced check and your communication with the tenant.
• Consider Lease Termination: If the tenant habitually pays with bad checks or does not cure the default promptly, you may have grounds for eviction under South Carolina’s non-payment of rent laws.

---

Legal Remedies for Bounced Checks in South Carolina

Eviction for Non-Payment of Rent

• If the tenant fails to replace the bounced check or pay rent, you can serve a 14-day demand for rent payment (per South Carolina Code §27-37-710).
• Failure to pay rent after the demand can lead to a summary ejectment action, the legal eviction process.
• Keep in mind: before eviction, ensure you have complied with all proper notice requirements and lease provisions.

Small Claims for Bad Check Recovery

• South Carolina landlords may also pursue a civil claim in magistrate court to recover rent owed plus fees resulting from the bounced check.
• You will need evidence such as the bounced check, bank notification, and written demand for payment.

---

Preventative Tips for South Carolina Landlords

• Screen Tenants Thoroughly: Strong screening reduces the risk of rent payment problems.
• Clear Lease Terms: Include a specific clause on returned checks, specifying fees and remedies.
• Require Electronic Payments: Consider requesting electronic payments through bank drafts or rent collection platforms to reduce the risk of bounced checks.
• Regular Communication: Maintain open lines with tenants to address payment issues before they escalate.

---

Sample Lease Clause for Bounced Checks

Including a bounced check clause in the lease agreement can help clarify expectations:

*“If a rent payment is made by check that is returned unpaid due to insufficient funds or other reasons, Tenant shall be liable for a returned check fee of $35, along with the outstanding rent amount. Landlord may require all future rent payments to be made by certified funds. Failure to cure the bounced check within five (5) days of notice shall be considered a non-payment of rent and grounds for termination of this Lease.”*

---

Summary

South Carolina landlords should approach bounced rent checks with a balance of professionalism and legal awareness:

• Confirm and document the bounced check.
• Notify tenants promptly and request immediate payment.
• Charge reasonable returned check fees if allowed by the lease.
• Monitor repeated offenses and require certified payments if necessary.
• Use legal remedies such as late payment demand notices and eviction for unresolved non-payment.
• Include clear lease provisions addressing bounced checks.

By following these steps, landlords can minimize financial losses and maintain orderly rent collection practices within the framework of South Carolina law.