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What to Do If a Self Storage Tenant’s Rent Check Bounces

Krista Diamond | December 6, 2017 @ 11:04 AM

Checkbooks often feel obsolete, but every self storage operator still knows a few tenants who like to write checks for their storage unit rent. What happens when one of those checks bounces?

Self storage tenants can fail to pay rent in a number of ways. Sometimes they forget to pay, sometimes they intentionally don’t pay. Other times they pay with a debit card or check that’s linked to a bank account with insufficient funds.

While we could talk—and have talked—about what to do when tenants give partial payments or don’t pay rent on their storage units at all, let’s get into what happens when a rent check bounces, what you can do to secure payment and how to prevent it from happening again.

When a Rent Check Bounces

So what exactly happens when a self storage tenant pays rent with a check that bounces? First, the tenant hands you the check. Next, you deposit the check at your bank. The bank credits the amount from the check into your account before withdrawing the funds from the customer’s account.

Nothing fishy so far, right?

This is where it gets frustrating for everyone involved (but mostly you, the self storage operator). If the bank is unable to collect the amount from the person who wrote the check, the check gets returned—or bounced—and marked NSF (Non-Sufficient Funds). The check writer is charged an NSF fee of around $30. Unfortunately, the recipient of the bounced check also owes a fee, which can typically be recouped by charging the check writer a returned check fee. You can see what your state allowed NSF fee is here.

What You Can Do

As soon as you learn of a bounced rent check, overlock the storage unit and contact the tenant. Let them know that the rent check bounced and be clear about the amount they owe, including the NSF free and any late fees that may have incurred during this time. Remind them that they will not have access to their storage unit until they pay what they owe.

You may require the rent payment and all fees in cash or money order to avoid having another check bounce. If you do accept a check for this (which we strongly recommend against), unlock the storage unit when the check clears, rather than right away.

Preventing Bounced Checks

Once you’ve been through the hassle of a bounced check as a self storage operator, you won’t want to find yourself in such an unenviable situation again anytime soon—or ever. To prevent storage unit rent checks from bouncing in the future, there are a few steps you can take.

Perhaps most obvious of all is this one: Don’t allow a tenant who has bounced a check in the past to pay self storage rent with a check in the future. You may require this tenant to pay with cash or a money order going forward, or at least for a specified period of time.

You can also help prevent bounced checks by depositing checks that you receive right away. Often, self storage tenants will make sure that the funds are available when they write a rent check. If you wait too long to deposit checks, those funds might have been spent elsewhere.

When accepting rent checks, ask that tenants do not post date checks. Require that checks are written with the current date or the date that rent is due only.

Lastly, be diligent about keeping up to date contact information on tenants, including addresses, phone numbers, email addresses and even photocopies of driver's licenses. This will help you secure rent payments from tenants who bounce checks in the future. Communication solves a lot of issues between storage facilities and tenants, and the unfortunate situation of a bounced check is no exception.

Krista Diamond

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