Collecting rent payments through cheques is a common practice among UAE landlords and property owners. If you compare it with cash payments, cheques are way more convenient, secure and beneficial. However, the only drawback of this payment method, apart from running out of cheques, is that it may bounce.
Bounced rental cheques are not a nice thing to deal with as a landlord, it may raise the question of your tenant’s credibility and may pose a risk if you have already allowed them to stay in your property. Following are a few ways you can handle rental cheque bounce in UAE.
1.Notify The Cheque Issuer
The first thing you should do when the rental cheque is bounced is to notify the issuer or the tenant about it. Inform your tenant or send them a demand notice informing them about the cheque bounce signalling that you will initiate legal procedures if not paid back after a certain time. Also, give the cheque issuer a time period to figure out the reasons their cheque was bounced.
2. Identify The Reason
There are several reasons a cheque bounces and most of them necessarily aren’t illegal or borderline criminal. Some reasons a cheque may bounce are:
- Insufficient funds in the tenant’s account.
- The issued check has gone stale.
- Payment issued on a personal cheque instead of an official cheque.
- The cheque issuer may have cancelled the cheque with the bank.
- The tenant’s bank account was blocked.
- Misspelt names and signature errors on the cheque.
UAE has strict laws and punishments regarding a bounced cheque which may end the issuer in prison, so first, confirm why the renter’s cheque has bounced before informing legal authorities.
3. Issue A Notice For Fresh Payment
Regardless of the reason behind bounced rental cheques being illegal or not, immediately issue a certified notice to the tenant, asking them to make the fresh payment. Ask them to make the payment in a time period along with any late fees through your desired payment method while warning them about legal actions if the payment is delayed.
Also, request your tenant for a return receipt and make copies of the letter and the receipt. This serves as evidence if you have to take your tenant to the court.
4. Don’t Accept Payment From A Personal Cheque
Personal cheques are more likely to bounce compared to bank cheques or any other official cheques. Many landlords make the mistake of accepting their tenant’s rent payment through a personal cheque and then depositing it in the bank without verifying the cheque first. Not only are personal cheques riskier, but they may also cost you additional charges at the bank.
Moreover, if you’re issuing your tenant a repayment letter, specify them to not write a personal cheque. Therefore, avoid payments made through a personal cheque at any costs as they are unreliable and could be difficult to cash.
5. Start The Eviction Process
If your tenant doesn’t respond or pays the rent within the specified time frame, start the eviction process. UAE has reformed its laws regarding tenant eviction, making the process faster and easier for landlords. You may have to hire a reputable UAE lawyer to draft and issue a legal notice to your tenant.
6. File A Case
The last resort to handle a bounced rental cheque is to file a case and in UAE, you can either file a criminal case or a civil case. Filing a civil case means the UAE rule against the cheque issuer and will be asked to settle the debt within a stipulated time frame. For filing a criminal case, you must receive a letter from the bank mentioning the reason for the tenant’s bounced cheque and if the reason is illegal, then you must file a criminal case against the cheque issuer.