We at domu strongly believe in the notion that tenants should be required to pay their rent by check and not with cash.  There’s always going to be an unlucky landlord who not-so-coincidentally gets robbed at the precise moment that his pockets are flush with freshly-collected rent dollars.

But, unlike cash, rent checks can occasionally be bounced, and banks have a way of collecting fees on bounced checks.  When a tenant has a bounced rent check, the landlord is typically assessed a NSF charge by the bank at which it deposited (or attempted to deposit) the funds.  Fortunately, for just these occasions, Illinois vests the payee (in this case, the landlord) with the right to sue the tenant for recompense, plus treble damages (capped at $1,500), court costs, and attorneys’ fees, after the payee (or landlord) sends the tenant a statutorily-mandated nasty-gram and gives him thirty days to make good on the original payment plus the returned check charge.  While this can be lucrative and perhaps inflicts great pain on the tenant, it requires a significant investment of time and expense, and the prospective reward does not necessarily outweigh the aggravation.

The easiest way to handle a bounced rent check is to incorporate into the lease a provision specifying that the tenant “shall pay” a fixed fee (the domu model lease says 50 smackers) in the event that a check is returned for insufficient funds.  Courts are hostile to penalties, so the fifty bucks is there to compensate the landlord for the charges assessed by its own bank, along with the hassle of having to notify the tenant and deal with the problem administratively.  Anything more than fifty big ones and the landlord is probably pushing it.  (Remember, the returned-check charge should be separate and apart from any late payment fee.)  The lease should also include any returned-check charge in the definition of “rent,” as this enables the landlord to sue for eviction if the tenant fails to pay the charge.

No doubt, if the tenant ultimately makes good on the rent, the late fee, and the returned-check charge, the landlord should be a happy camper.  Nonetheless, for landlords who prefer to avoid the aggravation altogether, the lease should also include a provision specifying that if two or more checks are returned for insufficient funds during the lease term, the landlord shall have the right to demand that all future payments be made solely by cashier’s check or money order.  The domu model lease contains just such a provision.