tenants seem to think their security deposit should cover the last month’s rent – it doesn’t seem to matter that they signed a legal contract specifically stating that this is NOT the case
one of the games the tenant will play is to make sure there isn’t enough money in the checking account to cover the last month’s rent check – long before you can collect on the bad check they will have moved out
some of the ways to prevent this situation:
– collect first and last month’s rent up front along with a security deposit (most people don’t have this much money available so you will severely limit your pool of potential tenants doing this)
– make the security deposit significantly more than one month’s rent – by at least $500 – this gives the tenant an incentive to pay the last month’s rent since they will lose the $500 otherwise
if you end up with a bad check from a tenant here’s a potential workaround: take the bad check to their bank and deposit enough cash into their account so the check will clear – if you can deposit $300 and cash a $1200 check you will be far better off than trying to get a judgment against the tenant – a collection agency will only give you half of what they collect IF they are successful at collecting
the bank won’t tell you specifically how much you have to deposit – you have to say something like, “if I deposit $300 will I be able to cash this check?”
most likely, by cashing the check you will cause the tenant to bounce a whole string of checks before they realize what has happened – at $15 to $45 per pop for bounced checks, their attempt to get over on the landlord becomes expensive quickly – I only had to do this a few times and each time it was young tenants (twenty-somethings)
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on a related note, NEVER accept partial payment for rent or a security deposit – if the tenant doesn’t have full rent on the due date serve them with the three day pay or quit notice – if you accept partial rent you are stuck with them for at least another month and they may or may not ever pay the remaining balance – likewise with paying the security deposit in chunks – once you let a tenant move in they are in control of that property – what is your recourse if they choose to never pay the remaining balance?
