Solving the problem of Tenant Bounced Checks
Check Sent For Collection
In the rental business you will sometimes have your rent paid by personal check. And these checks sometimes do not clear. In other words, they “bounce.” If you’re unsure about a particular check after it has bounced, you could call the bank on a daily basis. When the bank says it’s good, jump in your car and go cash it, If you have the time to do this, fine; if not, then try this. Send the bank your name, phone number and mailing address. What they will do is watch that account balance daily (usually up to 30 days) and the bank takes a small fee (maybe $5 – $8) for doing this and will mail you the certified funds. The nice thing about this process is that the check sent for collection will be the #1 priority on that account over and above all other checks coming in. The only hold that takes priority over this one is an IRS seizure of one’s account. Check Will Not Clear? Let’s say your tenant writes you a personal check for $400 and you need the money right away. However, after calling his bank you find it will not clear, because he has only $300 in his account. The check is worthless, right? Not exactly. Go to his bank and bring $100 cash with you. You can deposit this $100 cash in the tenant’s account. Now his balance is $400 so you can cash your check. You didn’t get the full $400, but you did get $300. WARNING: If you fly this with a commercial bank they may not let you cash the check on the spot since the funds may not be posted to the tenant’s account until the next business day. In this case, just leave the check with them for collection. Be sure that no one else has a check up for collection either or your $100 is gone. With many savings and loans and credit unions, you can usually cash the check on the spot after making the deposit. Exchange a Personal Check for Cashier’s Check Perhaps you are a seller accepting earnest money in which the personal check is made out to a title company, attorney or other escrow agent. You might be the landlord tiling a check for a deposit on a rental property for a third party. As it turns out, these personal checks (when endorsed) can be taken to the issuing bank by ANYBODY to exchange it for a cashier’s check so long as the funds are there. The cashier’s check is issued to whom the personal check is made out to and the remitter is whoever signed the personal check. Most commercial banks will allow that the cashier’s check be drawn on a personal check for the amount of a cashier’s check fee, usually $2 . $5.