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Avoid bad checks from Tenants and Verify Funds

May 5, 2013

So if you are landlord long enough, you will eventually get a bad check. I wanted to pass on something that happened in March that I am just now getting around to posting about.

My tenants in Property 4 pay rent quarterly. This is an arrangement I made with them a while back in exchange for a 24 month lease and a reduction in rent. They are great tenants and this was a win-win for both of us. They usually pay me in cash which is a real wad of money as the rent is $1,200 per month on this property. So in March, I show up and they present me with a check.

NSF returned check

Something just did not seem right about this as the check number was really low, written from the wife’s account, and they usually paid me in cash. I did get one check from them before and it was from the husband’s account and at a different bank. Anyhow, given the large amount of the check and my GUT feel, I did something my father told me to do with every check that I get. Go the bank that the check was drawn from and verify the funds.

You can find this advice in some of the RE books, and I must say I would recommend you do this. It’s not a huge effort and worth it in the long run. You need to go to the bank that the check is from, walk up to the teller and tell him/her you want to verify funds are there to cover this check. In my state, they are required to tell you. You don’t need an account at this institution or anything. It’s on their paper, they have to tell you. Now, I must say even if they tell you that the check is good that only means it’s good at that second – who knows 3 seconds from then? What I look for is the – NO answer. And this is what I got.

I went back the next day to the bank. Still no good. I called my tenant and asked her if she made a large deposit. She informed she did and it was on a Saturday through the drive-thru. I assumed that was the issue and waited another day. Still no good. I called my tenants back and had them meet me at the bank.

They met me at the branch near the house, and it turns out they deposited the funds in one account and wrote me a check from a different account. Honest mistake. They moved some dollars around and the check cleared. Disaster averted – they were extremely apologetic. It was now the seventh, but of course I did not charge them a late fee.

Had I not checked this at their bank, I would have just deposited their check into my account. It would have bounced and caused all kinds of headaches for them and me. Furthermore, about a week after this deposit I was out of the country on Spring Break with the family at the beach – I would have gotten all these nasty e-mails/calls from my bank about a bad check. I would have been panicked and probably would have spoiled the vacation and raised my stress level.

I am so glad I made that stop by their bank. Do yourself and your tenant’s a favor and verify funds on your checks.


From → Landlord

  1. Chuck,

    I really like the way that your protected your tenants from embarrasment and preserved your good relationship with them.

    With good tenants, I don’t mind going the extra mile either. I want them to stay in my property as long as possbile.


  2. Chuck,

    On another topic, I’d be glad to sent you a complimentary copy of my new book. Just send me your mailing address on my contact form at

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