Clause in Rental Agreement

[jillianleab]

What is the name of your state? Virginia

I've posted here a few times and gotten some really great advice, so I'm hoping I can get help again.

I'm a landlord, and currently one of my properties is vacant. I am looking for new tenants right now. With past tenants I have encountered trouble with bad checks and would like to avoid this in the future. Can I place a clause in the lease agreement that says if the tenant bounces X number of checks, they are required to pay all further rent payments in certified funds? I've looked through the Virginia landlord/tenant agreement and don't see anything that would prohibit me from making this a clause in the lease, but I want to make sure I'm not missing something obvious. Does anyone else do this? Is it advisable?

Thanks!

 

[BelizeBreeze]

What is the name of your state? Virginia

I've posted here a few times and gotten some really great advice, so I'm hoping I can get help again.

I'm a landlord, and currently one of my properties is vacant. I am looking for new tenants right now. With past tenants I have encountered trouble with bad checks and would like to avoid this in the future. Can I place a clause in the lease agreement that says if the tenant bounces X number of checks, they are required to pay all further rent payments in certified funds? I've looked through the Virginia landlord/tenant agreement and don't see anything that would prohibit me from making this a clause in the lease, but I want to make sure I'm not missing something obvious. Does anyone else do this? Is it advisable?

Thanks!

There is no prohibition to the type of clause you are considering nor is it bad business.

 

[JETX]

Can I place a clause in the lease agreement that says if the tenant bounces X number of checks, they are required to pay all further rent payments in certified funds?

Absolutely... and a very common requirement.
You can also include a statement that a bounced check is NON-paid rent and the tenant is subject to eviction, plus a $25 'bounced check fee'.

Virginia 'bad check' law:
"The holder of a bad check generally is entitled to the recovery of the face amount of the check, legal interest from the date of the check, check charges by the bank if the holder, and a processing fee of $25.00 in a civil action. (VA Code. 8.01-27.1.)

If the holder of a bad check sent the statutorily required written notice to the issuer of the bad check, by certified, registered, or regular mail with proof of mailing, and the issuer of the bad check failed to pay the demand within thirty (30) days after receipt of the written notice, the holder may be entitled to three (3) times the amount of the check, up to a maximum amount of $250.00, in addition the amount of the bad check, the check charges and the $25.00 processing fee. (VA Code 8.01-27.2.)

 

[jillianleab]

Thanks, I figured this would be okay, but I've been sued before (on an unrelated issue, but by a tenant nonetheless) and don't want to do anything that will make me look bad if I end up in court. JETX that's a great idea about putting the statement in regarding bounced checks are non-payment and subject to additional fees, thanks for that suggestion. I had a lawyer review the lease I use and he never pointed these things out...

Now, how long does it take to get past the "learning curve" of being a landlord???

 

[BelizeBreeze]

Thanks, I figured this would be okay, but I've been sued before (on an unrelated issue, but by a tenant nonetheless) and don't want to do anything that will make me look bad if I end up in court. JETX that's a great idea about putting the statement in regarding bounced checks are non-payment and subject to additional fees, thanks for that suggestion. I had a lawyer review the lease I use and he never pointed these things out...

Now, how long does it take to get past the "learning curve" of being a landlord???

That depends on how much gas you have in the car, how far the nearest bookstore is from your home and how much money is in your pocket....take the hint

 

[FarmerJ]

I hope you word your lease clause in such a way that after one time of a bounced check there will be no second time OR better yet you know if you wish you can give discount for payment monthly with a cashiers checks, do you think it would be worth 5 to 10.00 a month incentive for a tenant to either pay you in cash or with cashier check every month ? Personal checks can be messy, You know also some banks will set up rental recieving accounts too so the tenant only needs to bring in a ticket and can make the payment into a specific account, they get reciept right on the spot too.

 

[Gadfly]

If you think your property attracts tennants who have problems paying their bills you can start right off by accepting only certified checks.

How long does it take to get past the learning curve? Depends. For me, 30- years so far.

 

[jillianleab]

FarmerJ, I am planning on wording the clause to request certified funds after one bounced check. I agree that personal checks can be messy and have toyed with the idea of offering a discount for cash/certified funds. I think you're right, $5 - $10 is worth it, and perhaps would provide the tenant with enough incentive to actually do it. I've also thought of offering a discount for paying BEFORE the due date (payment on Jan 28 for Feb rent, for example).

Gadfly, I've only had one tenant who has given me problems with bounced checks; he actually got arrested for check fraud shorty before I evicted him... All the other tenants I've had pay with good checks but I want to avoid potential problems with future tenants. I always seem to run into a problem with someone a few months into their tenancy and kick myself because there is nothing in my lease to protect me. Damn learning curve!

 

[JETX]

PAYMENT: All Base Rent and Additional Rent due and payable to Landlord under this Lease shall be made payable to (Your name, your address). Payments of Rent (other than in cash), if initially dishonored, shall not be considered rendered until ultimately honored as cash by Landlord's depository. Except as expressly set forth otherwise in this Lease, Tenant will pay all Rent to Landlord without demand, deduction, set-off or counter-claim.

DISHONORED CHECKS: If one of Tenants’ checks bounces, Landlord may require rent payments to be made by cash, money order, cashier's check, or certified check. Tenants shall pay a service charge of $25.00 for each check returned unpaid by the payor bank for any reason. This service charge shall be added to the rent payment due for the month in addition to the late charges described above.

A pretty good local (Virginia) lease form can be found at:
http://www.legal.sga.vt.edu/LEASE_VRLTA_2006.doc

 

[jillianleab]

Thanks, JETX, I'll be sure to read that lease throughly and make necessary changes to it for my particular situation. At first glance it seems to be much more inclusive than the lease I currently use.

Thanks!

 

[LindaP777]

Now, how long does it take to get past the "learning curve" of being a landlord???

LOL! I've been a LL 7 years and still amending new leases as problems arise. My lease used to be 2 pages, now are 3 pages due to things I keep adding (as I get burned, I usually add something to the lease to avoid future problems).
After a tenant locked themselves out and I had to run over with my set of keys, I added;
13. LOCKOUT: If the Tenant becomes locked out of the Premises, the Tenant will be charged $50.00 to gain re-entry.
I.e., after a tenant parked in the yard and ruined all the grass and another tenant parked a trailer in the driveway for a year, I added;
14. PARKING: No parking on lawn for an extended length of time will be permitted. Tenant must limit extended parking to the driveway. Only operating cars can be parked in the driveway. Non-operating cars or trailers must be parked in the garage.

So, it's a continual work in progress!

 

[Who's Liable?]

There is NO perfect lease... Even good leases have clauses that are illegal... It's a never ending continuous work in progress