Bounced rent cheque

[retiredby50]

I`ve had this renter in one of my properties for 3 months, this in another town so I can`t just show up and knock at the door. I aquired the property, and her as a renter, before I joined REIN. I checked her employment, and her then current landlord, and everything checked out 100%.

Anyway, this month`s rent cheque bounced. The problem is that they take two weeks to clear, so it`s the middle of the month before I found out. I phoned her immediately and she sounded very surprised(they always do, don`t they...). I told her it needed to be cleared up right away, and that she should add a $50 penalty.

She promised me that she would go that day to the bank, get a bank draft, and send it in the mail immediately. That was a week ago, and I haven`t seen the new cheque.

-So first of all, is there anything a landlord can do to help prevent bounced cheques?

-Secondly, should I have handled this situation differently to make sure I get paid right away?

-Third, can one play the `if rent not paid by XXX day after the due date, it will result in eviction,` card on a bounce? The person could certainly argue that they `intended` to pay the rent, but that it was just a mistake. And isn`t the LTA generally in favour of the tenant, making it hard for us to toss someone out?

-And this is the trick question. Based on experience, is there a way to tell if your renter is jerking your chain, and is going to become a pain in the caboose, or if it was a legitimate mess up that will never happen again?


Thanks for your thoughts, folks
Keith

 

[PaulPoulsen]

Hey Keith;



I don't know if you're in Alberta but if you are, Rebecca wrote this AWESOME post this past November.



http://myreinspace.com/rein_members_only/Members-Only_Discussion/81-1794-How_to_Evict_a_Tenant.html

 

[RebeccaBryan]

Keith,

Yes read that post. Never accept another cheque from this tenant. Get them to pay you by email money trasfer or the like since they are so far away. That way you have the cash on the 1st.

Act now, she`s jerking you around, and you`re right, they always do! We`ve had tenants in one of our townhouses for over a year. They just started writing us cheques instead of money orders. Last month bounced and the cheque didn`t come back to us for two weeks, however, the tenant called us on the 2nd because they knew it was going to happen and made arragements to get us the money, which they did.

Tenants always know when a cheque of that size is going to bounce. They have likely been paying rent for years. It`s not just something you forget.

 

[dwb]

They`re new tenants right? Only a few months in the place?

You don`t wait, you don`t engage in a whole lot of conversation about it. Don`t mess around. Send a firm message immediately.

I would slap them with the N-4 eviction notice form even if they are 1 day late and get the ball rolling for eviction immediately. This accomplishes 2 things:

1) It takes a long time to go to get the court date, go to court, get the eviction approval and get them out anyways so if it goes that far you`ve already started everything as early as possible.

2) Most importantly, you are delivering the message that you aren`t messing around and that you are not an amatuer Landlord and that you are not a sucker. You don`t accept late payments and by sending the N-4 you are demonstrating that you are serious. In most cases, the reality of the situation dawns on the tenant and they are never late again. They are reminded early on about the landlord/tenant relationship and that it is one to be taken seriously.

3) Once they go back to paying on time, after 3 months of timely payments, send out a gesture of appreciation to reward them for this timely payment behaviour, like a $15 Blockbuster gift card or something. Clearly say that you appreciate their recent timely payments of rent.

Finally, where is your property manager during all of this? This is an out of town property right?

Hope this helps

 

[writeabooknow]

Hi all,

Boy, if I had a nickel for every time I wanted to give the tenant the benefit of the doubt...

Unfortunately, I`m a really, really nice guy. My wife say`s it`s my downfall as a landlord.

If you want your tenants to act in a specific way, you have to train them to act in that way. You have a set of rules, you give a copy of them to the tenants initially and again every two months to reinforce reality. You do not vary from these rules... EVER.

When you`re interviewing tenants tell them during the discussion three times (I`m serious, tell them your policy is to repeat this to them three times) that any late rent payment, even by a minute, `triggers` an eviction notice. It`s simply out of your hands. It happens automatically. Call me a few days before and tell me you`ll be a couple of days late and I`ll say that`s fine, but the eviction notice is still triggered and sent at 1 minute past midnight.

If during the life of the lease three eviction notices are `triggered` for non-payment of rent, another eviction notice is automatically triggered for frequent late payment of rent. Sorry, it`s out of my hands. And, if in the future another landlord calls me for a reference for you, the first piece of information that is offered to them is the number of eviction notices that were issued. I wish it wasn`t the case, but that`s the way the business is set up. I don`t have any say in the matter. So I strongly suggest that you do everything possible to make sure your rent is paid in full and on time. (Really paint a picture of a living hell if they start acquiring eviction notices: credit rating problems, future rental refusals, etc.)

Blame the accountant, blame the business manager, blame anyone you want to if you don`t want to come across as the bad guy yourself. But make sure they know that`s the way it is.

If you`re in the middle of the lease, write them a letter explaining these new rules and telling them you understand if they`d prefer to end their lease with you immediately, and you`ll certainly accommodate them if that`s their wish. But, of course, you hope they`ll stay.

Hope that helps.
Cheers,
Steve Manning

 

[retiredby50]

Hey all,

Thanks so much for taking the time to offer up your expertise.

So I was reading all my REIN information, and my Alberta Residential Tenancy Act, and everything else I could get my hands on. I`m still a bit confused, but a little more educated.

So she said she would get a bank draft, and send it to me immediately, but that was over a week ago, and I`ve been calling, and she won`t return my calls. I had left a message that if I didn`t have it in my hot little hands by Tomorrow, Tuesday in this case, that I was sending out an eviction notice.(I`m new to this, so you`re probably all shaking your heads, as I`m giving 10 times as much leeway as I should)

Anyway, I was just about to start the ball rolling tonight, when I decided to call her one last time.

As it turns out, she has been out of town for the last week, and just got back a few minutes ago. (which may or may not be a true story) she said she has the copy of her bank draft, and she`s going to fax it to me tomorrow, to prove to me that she actually did get a bank draft, and that it`s been sent(Once the bank draft is taken, the money is removed from her account, so she would have no reason to withold sending it at that point, correct?)

So I`ll know tomorrow if she`s legit or she`s been taking me for a ride

But in this situation, there are, I believe, many lessons.

1-Things may not be as they first appear.
2-fire off the eviction notice right away, even if the person has agreed to pay.
3-I do not have all my ducks in a row for an eviction, should it be necessary. This has been a real awakening for me.


Questions:

So in the RTA it says if they don`t pay their rent, I "apply to the court for an order to end the tenancy OR give the tenant a 14 day notice of termination of the tenancy."

It sounds like I can just write a letter, post it on the door, and the 14 day period has begun. Is that correct, or do I need to go to the court of queens bench right away?

Then the "writ of posession" is ONLY if they won`t leave, correct?

OH, and DWB, you mentioned sending out an N-4 dcument. What is that? I can`t find a reference to it in my REIN stuff.

Thanks all. You`ve been very helpful to a newbie who might just be getting a whole TON of experience in the next month or so!!!

Blessings
Keith

 

[RebeccaBryan]

The minute you discovered the bounced cheque, you needed to take action and evict. The stories will continue. Did she actually send you the fax of the bank draft? Did you know that bank draft fraud is rampant? I would tell her that a copy isn`t good enough, and that you will be proceeding with eviction. In two days she owes you next months rent. How are you going to allow her to pay that? Email money transfer is the answer to this problem, or pay someone to pick up the cash from her house. Immediate payment is necessary and no other option should be allowed.

Your tenant needs to figure out how to get you the money. This is her responsibility. Cheques are now unacceptable unless they are certified. Mailing them is unacceptable because you haven`t received it yet.

Where is this property? Where are you?

By the sounds of your posts you need to hire a property manager, and a good one that someone on here recommended.

You`re being taken advantage of, and you`re allowing it to happen.

 

[retiredby50]

Hmmm, I`ve tried o respond twice to this post, and it`s not taking.

Rebecca, et al,

Thank you for your candor. I think you are all bang on on your assessments that I`m being played for the patsy(As Warren Buffet says, if you`ve been playing poker for 20 minutes, and you don`t know who the patsy is...guess what?) It`s due to inexperience. But you can bet this is not going to happen again.

I`ll keep you all posted as to how this plays out, so others can benefit from my learning curve on this one.

Thanks
Keith

 

[retiredby50]

Hey All,

Well, it`s now June, and here is the update on my situation.

After I talked to you guys, it all got interesting. I decided to go there(Innisfail) to collect the rent from my tenant, S-a-n-d-y=W-i-l-t-o-n. I showed up at the door, and her mother, who I think was living there, but wasn`t on the lease, came to the door. I said I was there to collect the rent I was owed(and had been promising me). The mother told me Sandy was downtown, and would be back in 1/2 hour.

I went away to do a few things and came back. I decided to pull up across the street and wait for her to come home.Then realised there was a truck behind me, and that there were two women in it. They started and pulled around me and took off, with their faces turned away. The passenger was my tenant.

I thought, "this is rediculous. I`m not going to play this game any more." So I left, and saw them keeping an eye on me as I drove out of town, to make sure it was safe for them to go home.

I drove to Red Deer, cut a cheque to a management company, and went home. I slept a lot better after that.

Two weeks later I got a call from the management company that they were gone. I had my place back.

Lessons learned:

1-You can`t be too careful on your diligence regarding tenants.(in my defence, when I described my process to the management company, they told me that the person would have passed their checks too.) I asked past landlord specific landlord questions, and they answered them in ways that led me to believe that they were a landlord. Now I`m not so sure. Maybe we should be checking at city hall to see if the person who claims to be the landlord actually owns the place?

2-Trying to evict a tenant yourself is a waste of time and energy. There are people who do that for a living, and will look at it objectively, as a business. They are not going to let emotions get in the way, as we landlords often do. Write the cheque, make it their problem, and sleep like a baby. You don`t operate on your own hernia. You don`t act as your own lawyer on your real estate transactions. Don`t do your own evictions, unless your skin is like leather and you know it all inside out.

3-If the cheque bounces, act IMMEDIATELY! Don`t let them jerk you around for a month and a half like I did.

4-if you own a rental. GO SAY HI TO THE NEIGHBOURS. I was there afterward cutting the grass, and happened to say meet the lady next door. If they are an owner, as she was, they have a vested interest in the neighbourhood. Give them your card aned ask them to call you about suspicious activities at your place. Ask them to call for sure if there are constantly multiple vehicles parked there, which would suggest that there are more people living there than on the lease.

She revealed to me all sorts of `activities` that were going on. Had I known about it, I`d have been able to act much sooner. There would have been warning, even stuff that might not have shown up on a 24 hour notice inspection.

(HINT: sometimes you can find out if said neighbour is interested in selling too!)

5-Inspect your place now and then. Had I done this, I might have found out that the chain smoking mom was living there, and maybe one other person. Thus breaking two lines in the lease, and I could have possibly gotten rid of them from that.

6-If there is any problem with a tenant, always assume they are lying to you, unless they can prove to you otherwise. This makes you less gullable, and more likely to act.

So here`s the breakdown of the cost of my recent education:

-two month`s rent-$1550

-lawn mower rental-$85

-one weekend of me cleaning the house, if I pay myself $50 per hour-$700

-management company eviction fees-$325

-town water and sewer-$85

-learning about how to deal with difficult tenants-PRICELESS!!!!

Oh, and I still have the asset, which is going up in value, and I believe I have found an equity building tenant, whom I have researched much more stringently.

It`s all good.

Taa
Keith

 

[SamEfford]

Congratulations Keith! Job well done.

 

[RebeccaBryan]

Keith,

Congrats. It`s difficult to overcome "wishful thinking" when you don`t get paid by a tenant. Mastering that, and acting fast, is the key to getting them out and getting an equity building tenant moved in. Admitting what you are not good at is also difficult sometimes. You did the right thing.

 

[retiredby50]

Thanks guys.

Hey, Rebecca. You had your own nightmare when I talked to you a while back. (extra people living there, drug deals going down, and such) How did that turn out? If you told the story I missed it.

Taa
Keith

 

[donnahamilton]

Hi, Keith, Thanks for sending me the link to your challange. As a do it yourselfer I am the teacher who sets the rules for the year. I always post a 14 day even if they phone to say they will be late. They are reminded to inculde the late fees. I also explain the procedure of what happens on the 16th if they do not pay.

FYI as told to me at the RTDRS states you can post a 14day OR you can apply for a hearing. That is what I did and worked very well. I also tell tenants that I will go that route if I do not get a heads up or if it happens more than once. So other than this pro I feel that I have control over my "class". This expierience will provide me with even more rules for the kiddies.
Thanks again, Donna

 

[Nir]

Keith,

Another option you have if a tenant`s cheque is returned again is to call him/her when you find out about it, provide your account number and transit number and ask that they deposit the rent amount to your account within 1 day, and that unfortunately, if they do not pay within a day you will have to send them a "Notice to end tenancy due to non-payment" (Form N4).

I had to do that today so wanted to share that with you. luckily in my case the amount was deposited within 1 hour! gladly, I didn`t even have to send him form N4.

Regards,
Neil

 

[retiredby50]

This is the second reference to an N4. I cannot find any reference to it in my REIN information. All I could find is that paper we got at quickstart, which is the `Consumer Tip Sheet` from the Government of Alberta. I could not find any reference to said document in there.

In fact, that consumer tip sheet was pretty much as useful as a screen door on a submarine in my case. Hence, the hiring of a management co.

Thanks again for the info

Cheers
Keith

 

[invst4profit]

N4 is the Ontario 14 day eviction notice.
Investmart you should have sent the N4 anyway. If this tenant is a future problem you have lost an opportunity to have a N4 on his file. You have to treat every tenant the same. If you have to send one to a good tenant that made a mistake tell them your accountant insists on sending N4s. By sending the N4 every time to every tenant that is late when you want to evict after 3 N4s they can not argue discrimination or harassment because you can show everyone is treated the same.
Remember in Ontario when a tenant gets 3 N4s on there file the rent review board allowes you to evict.

 

[Nir]

You can download it from the landlord and tenant board`s website:

http://www.ltb.gov.on.ca/en/STEL02_111286.html

just click on form N4 and N4 instructions

 

[dwb]

Keith, thanks for the update, I`ve learned a lot from your experience. Thanks for taking the time to inform us. A difficult situation for sure, but you handled it like a true professional and gained a ton of valuable experience which will be an asset going forward for you despite the financial cost of evicting those deadbeat tenants.

Thanks again and best of luck for locating a new responsible tenant.

 

[retiredby50]

Ahhhhhh,

I guess I should have been more clear about this. I`m in Alberta. Hence my inability to find any such thing as an N4 in my Alberta Govt. information.

Still good info for you Ontarioioians who might read this.

Taa
Keith

 

[NorthernAlex]

I just found this great thread and wanted to push him to the first page, so other new forum members can read/find it easier.


One question to invst4profit regarding his posting:

QUOTE (invst4profit @ Jun 12 2008, 07:45 AM) .....
Remember in Ontario when a tenant gets 3 N4s on there file the rent review board allowes you to evict.

Could you link me this? I couldnt find it but need this info badly.

Thank you.