How to Deal with Bounced Checks from Tenants: A Landlord's Complete Guide

By PropsManager Team · Rent & Finance · Dec 03, 2024

I still remember the first time a rent check bounced on me. It was February 2016, and I'd already deposited the check, paid the mortgage with it, and mentally moved on to the next month's problems. Then the bank hit me with a $35 NSF fee, clawed back the $1,450 rent deposit, and suddenly I was staring at a negative balance in my operating account.

That one bounced check cost me $35 in bank fees, a $29 late payment charge on my own mortgage, and about four hours of phone calls and paperwork to sort out. Grand total: roughly $265 in direct costs — plus the stress and lost productivity.

If you've been a landlord long enough, you've been there. Bounced checks — technically called NSF (Non-Sufficient Funds) or "returned item" checks — remain one of the most annoying realities of rental property management. According to the Federal Reserve, approximately 0.8% of all checks written in the U.S. bounce, and rental checks aren't immune. When you're managing 10, 20, or 50 units, the math adds up fast.

Here's the thing: bounced checks aren't just a nuisance. They're a cash flow disruption, a potential legal issue, and sometimes a warning sign that bigger problems are coming. Let's walk through exactly how to handle them — step by step — so you protect your bottom line and stay on the right side of the law.

Understanding Why Rent Checks Bounce

Before jumping into the protocol, it helps to understand why checks bounce in the first place. Not every bounced check is a deadbeat tenant trying to scam you. Sometimes it's genuinely innocent.

Common Reasons for NSF Checks

• Insufficient funds: The most obvious one. The tenant didn't have enough money in their account when you deposited the check. Maybe they wrote it hoping their paycheck would clear first. It didn't.
• Account closed: The tenant switched banks and wrote a check on an old account. This happens more than you'd think.
• Post-dated checks: You deposited a check dated for the 5th on the 1st, and the bank processed it before the tenant expected. Some banks honor the date, others don't.
• Bank errors: Rare, but they happen. A hold on the account, a misapplied deposit, or a system glitch.
• Fraud: The worst-case scenario. The tenant knowingly wrote a check on an account with no funds and no intention of making it good.

Understanding the "why" matters because it should inform your response. A 3-year tenant with a perfect payment history who bounces one check in February deserves a different conversation than someone who's bounced checks two months running.

Step 1: Get the Bank Notification and Document Everything

When a check bounces, your bank will send you a notice — usually called a "returned item" notice — and they'll debit your account for the original check amount plus a fee (typically $12 to $35 depending on your bank).

Here's what you need to do immediately:

• Save the bank notification. Print it or screenshot it. You'll need this as evidence.
• Record the date the check was returned.
• Note the reason code on the return. NSF and "Account Closed" are very different things legally.
• Calculate your total losses: the rent amount, the bank's returned item fee, and any cascading costs (like late fees on your own bills that resulted from the shortfall).

With PropsManager's payment tracking features, every transaction is logged automatically — including failed payments — so you've got a paper trail without digging through bank statements.

Pro Tip: Don't Re-Deposit the Check

Some landlords think, "Maybe I'll just try running it again in a couple days." Bad idea in most cases. If it bounces again, you'll eat another $12–$35 bank fee. And in some states, re-depositing a check without the tenant's knowledge can create legal complications. Unless the tenant specifically tells you, "Please try again on Friday — my paycheck hits Thursday," just don't.

Step 2: Notify the Tenant Immediately

Speed matters here. The moment you get that returned item notice, contact your tenant. Don't wait. Don't "give them a few days." Every day that passes is another day without rent in your account.

What to Say (and How to Say It)

Here's a notification template that's firm, professional, and legally sound:

NOTICE OF RETURNED CHECK

Dear [Tenant Name],

This letter is to inform you that your rent payment check #[number] in the amount of $[amount], dated [date], was returned by your bank due to insufficient funds.

As of today, your rent for [month] remains unpaid. Per Section [X] of your lease agreement, the following charges now apply:

• Outstanding rent: $[amount]
• Late fee: $[amount]
• NSF/Returned check fee: $[amount]
• Total due: $[amount]

Payment must be received within [X] days in the form of certified funds (cashier's check or money order). Personal checks will no longer be accepted.

Sincerely, [Your Name/Company]

Send this via email AND certified mail. The email creates an instant timestamp; the certified mail creates a legally admissible delivery record. Some landlords also send a text message for good measure — the goal is to make absolutely sure the tenant can't claim they "never got the notice."

Keep Your Emotions in Check

Look, I get it. A bounced check is infuriating. You're out the rent, you're out the fees, and now you've got to spend time chasing someone down. But getting angry on the phone or sending a hostile letter will only make things worse. Stay professional. Document. Follow your process.

Step 3: Charge the Appropriate Fees

This is where your lease language becomes worth its weight in gold. If your lease doesn't have an NSF fee clause, you need to fix that before your next lease signing.

Fees You Can (and Should) Charge

Important: Every state has different laws about how much you can charge for a bounced check. California caps it at $25 for the first bounced check and $35 for subsequent ones. Texas allows up to $30. New York permits "reasonable" fees. Before you set your fee schedule, check your state's Uniform Commercial Code provisions and landlord-tenant statutes.

Here's a real example: Let's say rent is $1,800/month. The check bounces. Your state allows a $35 NSF fee, and your lease has a 5% late fee.

• Outstanding rent: $1,800
• Late fee (5%): $90
• NSF fee: $35
• Bank fee recovery: $25
• Total owed: $1,950

That's $150 more than the original rent. And that's why bounced checks hurt — they hurt the tenant too, which is actually a useful deterrent.

Step 4: Require Certified Funds Going Forward

This is non-negotiable after a bounced check. Your lease should include language like:

"In the event that any check tendered for rent or other charges is returned due to insufficient funds, stop payment, or account closure, all future payments must be made via cashier's check, money order, or electronic funds transfer for the remainder of the lease term."

Once a tenant bounces a check, they lose the privilege of paying by personal check. Period. This isn't being harsh — it's protecting your business. A cashier's check is guaranteed funds. A money order is prepaid. Neither can bounce.

Some landlords go a step further and require certified funds for 6 or 12 months rather than the entire remaining lease. That's your call. Personally, I don't go back to accepting personal checks from that tenant. Ever. Fool me once.

Step 5: Know When the Bounced Check Becomes an Eviction Issue

One bounced check with a tenant who pays immediately upon notification? That's life. It happens. Two bounced checks in 6 months? That's a pattern. Three? You've got a chronic problem, and it's time to consider whether this tenant can actually afford the unit.

When to Start the Eviction Process

If the tenant doesn't make good on the bounced check within the timeframe you specified (usually 3–5 days), you need to treat it as unpaid rent and begin your jurisdiction's eviction process. In most states, that means:

1. Serve a Pay or Quit notice — typically 3 days in states like California, 14 days in others like Vermont.
2. Wait for the notice period to expire without payment.
3. File an eviction lawsuit (unlawful detainer) with the court.
4. Attend the hearing and present your documentation (this is where those saved bank notices matter).
5. Obtain a judgment and writ of possession if the court rules in your favor.

The entire eviction process can take anywhere from 2 weeks to 3 months depending on your jurisdiction. It's expensive — typically $500 to $2,500 in court costs, attorney fees, and lost rent. That's exactly why your fee structure and swift notification process matter so much. You want to resolve bounced checks before they escalate to eviction.

The Legal Side: Criminal Bad Check Laws

Here's something many landlords don't realize: writing a bad check is actually a crime in most states. If a tenant knowingly writes a check on an account with insufficient funds, that can constitute check fraud or theft by deception.

State-by-State Criminal Thresholds

• Under $500: Usually a misdemeanor in most states, punishable by fines and potentially up to a year in jail.
• $500–$1,000: Some states bump this up to a gross misdemeanor or low-level felony.
• Over $1,000: Often a felony charge, which means most bounced rent checks in moderate-to-expensive markets technically qualify.

Now, will a DA actually prosecute a bounced rent check? Usually not for one-off incidents. But if a tenant has a pattern of writing bad checks — to you and others — a police report creates a paper trail that strengthens your eviction case and any civil suit for damages.

Most states also have a demand letter process where you send the tenant a certified letter demanding payment within 30 days. If they don't pay, the criminal penalties and additional civil damages (often 2–3x the check amount) kick in. Check your state's bad check statute for the exact procedure.

Prevention: Stop Bounced Checks Before They Happen

The best bounced check is the one that never happens. Here's how to minimize your exposure.

Screen Tenants Thoroughly

A tenant who can comfortably afford the rent is far less likely to bounce a check than one who's stretched thin. The standard rule is rent shouldn't exceed 30% of gross monthly income, but I've found that 25% is a much safer threshold for avoiding payment issues.

During screening, look at:

• Credit score (650+ preferred; below 600 is a red flag for payment reliability)
• Bank account verification
• Income verification (pay stubs, tax returns, employer contact)
• Rental history — call previous landlords and specifically ask: "Did this tenant ever bounce a check or pay late?"

If you need guidance on verifying tenant documentation, check out our guide on how to spot fake pay stubs during screening.

Move to Electronic Payments

This one's huge. Digital ACH payments, credit cards, and online payment portals have made paper checks almost obsolete for residential rent collection. And for good reason.

With electronic payments through a platform like PropsManager:

• ACH payments verify funds before processing, so you know within 1–2 business days if a payment will clear — versus waiting 5–7 days for a check to bounce.
• Automatic recurring payments mean tenants don't "forget" to write or mail a check.
• Failed transactions don't cost you $35 in bank fees. Most platforms absorb the cost or charge a minimal fee.
• Everything is documented automatically with timestamps, amounts, and confirmation numbers.

If you're still collecting paper checks, you're making your life harder than it needs to be. Read our full breakdown: Automating Rent Collection: The Complete Guide to Ending Paper Checks.

Require Auto-Pay for New Leases

Some landlords now require tenants to enroll in auto-pay as a condition of the lease. Is it legal? In most states, yes — as long as you provide alternative payment methods for tenants who don't have bank accounts (think: money orders). The Fair Housing Act doesn't prohibit requiring electronic payments, but you need to ensure you're not inadvertently discriminating against protected classes.

Bounced Check Tracking Checklist

Use this checklist every time a check bounces to ensure you don't miss a step:

• Received bank returned item notice
• Documented the reason code (NSF, account closed, etc.)
• Calculated total amount owed (rent + late fee + NSF fee + bank fee)
• Sent written notice to tenant (email + certified mail)
• Set payment deadline (3–5 business days)
• Updated tenant file with bounced check record
• Switched tenant to certified-funds-only payment requirement
• If unpaid by deadline: served Pay or Quit notice
• If still unpaid: initiated eviction proceedings
• Reviewed lease language for future leases (added or updated NSF clauses)

How PropsManager Eliminates the Bounced Check Problem

Let's be real: the single best way to deal with bounced checks is to never receive a paper check in the first place.

PropsManager is built specifically for landlords who are tired of chasing paper. Here's how it solves the bounced check problem:

• Online rent collection with ACH and card payments — funds are verified before they hit your account.
• Automatic late fee calculation — no more manually tracking grace periods and doing math.
• Payment reminders sent automatically before rent is due, reducing late and missed payments.
• Complete audit trail — every payment attempt, successful or failed, is logged with dates and amounts.
• Tenant communication tools — send notices directly through the platform with delivery confirmation.

Landlords using online payment platforms report up to 60% fewer late payments compared to those still relying on checks and cash. That's not marketing hype — that's the reality of removing friction from the payment process.

Ready to stop dealing with bounced checks entirely? Check out PropsManager's pricing or request a demo to see how it works for your portfolio.

Explore More PropsManager Resources

Looking for the right property management software? Check out our in-depth guides:

• Compare Property Management Software — See how PropsManager stacks up against Buildium, AppFolio, Rent Manager, and Propertyware.
• Software for Small Landlords — Built for landlords managing 1–50 units without the enterprise price tag.
• AI-Powered Property Management — Discover how automation can save you 5–10 hours per week.
• Solutions for Property Managers — Scale from 50 to 500+ units without scaling your costs.

Frequently Asked Questions

How long do I have to notify a tenant about a bounced check?

There's no universal federal timeline, but best practice — and the standard in most state statutes — is to notify the tenant within 5 business days of receiving the returned item notice from your bank. Some states with formal "bad check demand letter" processes require you to send notification within 30 days. The sooner you notify, the sooner you get paid. Don't sit on it.

Can I charge a fee for a bounced check if it's not in the lease?

It depends on your state. Some states allow landlords to charge NSF fees up to the statutory limit regardless of what the lease says — the right is embedded in the Uniform Commercial Code or state bad check laws. However, you're always on much stronger legal ground if your lease explicitly spells out the fee amount. If your current lease doesn't include an NSF clause, add one at the next renewal. It's basic self-defense.

Should I accept a personal check from a tenant after one bounces?

Short answer: no. Once a tenant bounces a check, require certified funds (cashier's check, money order, or electronic payment) for all future payments. Your lease should include language that automatically triggers this requirement after any returned check. Some landlords give tenants a "redemption period" — say 12 consecutive months of on-time certified-funds payments — before reinstating personal check privileges. That's generous but reasonable.

Can I evict a tenant for one bounced check?

Technically, yes — if the tenant fails to make the payment good within the notice period. A bounced check means rent is unpaid, and unpaid rent is legal grounds for eviction in every state. However, most judges look favorably on tenants who attempt to cure the default promptly. If a tenant pays the full amount plus fees within your notice period, eviction is off the table. If they don't, you absolutely should proceed with the eviction process.

Is writing a bad rent check considered a crime?

Yes, in most states. Knowingly writing a check on an account with insufficient funds is typically classified as a misdemeanor for amounts under $500 and can escalate to a felony for larger amounts. For rental payments — which often exceed $1,000 — the potential criminal liability is significant. Most district attorneys won't prosecute a single incident, but a pattern of bad checks, especially after a formal demand letter, can result in criminal charges. The threat of criminal prosecution also serves as powerful motivation for tenants to make good on bounced payments quickly.

Stop Chasing Bad Checks — Modernize Your Rent Collection

Bounced checks are a relic from an era when landlords didn't have better options. Today, there's no reason to subject yourself to NSF fees, certified mail costs, and the constant anxiety of wondering whether this month's deposit will actually clear.

Every hour you spend dealing with a bounced check is an hour you could spend finding better tenants, improving your properties, or scaling your portfolio. The landlords who are building real wealth in real estate aren't the ones standing in line at the bank — they're the ones who've automated the tedious stuff and focused on what actually moves the needle.

PropsManager makes rent collection effortless, tracks every dollar automatically, and gives you the documentation you need if things ever do go sideways. Start your free trial today and leave bounced checks in the past where they belong.