When tenant buyers bounce checks for real estate payments

Written by admin on April 11th, 2011

When you deal with tenant buyers in real estate, you have to be prepared for any number of different scenarios. You may find that the tenant leaves the property without going through with his or her promise to purchase it. Or you may find that the tenant seriously damages the property.

In some cases, the tenant has made an agreement he or she isn’t financially prepared for. This can cause a myriad of problems for the company. As a result, it’s important to be prepared in case such a situation happens to occur.

You may be wondering what to do if someone has sent in a payment, then you receive a bounce checks letter from the bank that says the payment was returned due to insufficient funds.

The wisest course of action in such a case is to call the tenant immediately. It’s also a good idea to call the bank that the check is drawn on to see if the funds are available. If the funds are available, you can just go down to a local bank and cash the check. But you should make sure that the tenant knows that he or she is responsible for any returned check fee, late fees, and the cost of the mileage that was incurred when you drove to the bank.

If the money is not available at the bank, you should post a three-day notice immediately. For the most part, the money should come through, unless the tenant is planning a hasty exit.

Although the tenants know that the rent is due at the first of the month, you are likely to hear a number of excuses about why the rent is late. It could be a medical emergency, a family emergency, or a misunderstanding. You could probably write a book about all the excuses you will receive.

From a business standpoint, it is best if you do not cut the tenants any slack. They’ve known for a long time when the rent is due, and they should have planned accordingly. If you consistently permit late payments, you’re likely to find that you seldom receive the rent on time. Also, you should keep in mind that tenants who are routinely late making their rent payments are unlikely to be able to afford to buy a house. However, if you screen your tenant applicants carefully, you should be able to avoid this problem, since you will accept only those tenants who have a stellar credit history.

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