NSF Fee for Rent: Bounced Check Guide
Everything landlords and tenants need to know about NSF fees (Non-Sufficient Funds) and bounced check fees for rent payments. State limits, lease language, and enforcement.
What Is an NSF Fee?
An NSF fee (Non-Sufficient Funds fee), also called a bounced check fee or returned check fee, is charged when a tenant's rent payment fails because there isn't enough money in their bank account. When a check bounces:
- The bank returns the check to the landlord
- The landlord's bank typically charges them a fee ($12-$35)
- The landlord must track down the tenant for replacement payment
- The landlord charges an NSF fee to recover costs and compensate for time
NSF fees are separate from and in addition to late fees. While late fees penalize late payment, NSF fees specifically compensate for the costs and inconvenience of a bounced check. Landlords typically charge between $25 and $50 for NSF fees, though some states impose specific limits to prevent excessive charges.
State NSF Fee Limits
NSF fee limits vary by state. Some have specific caps, while others allow "reasonable" fees that cover actual costs. Here are limits for major states:
| State | NSF Fee Limit |
|---|---|
| California | $25 first, $35 subsequent |
| Texas | No statutory cap (reasonable) |
| Florida | $25-40 typical, no cap |
| New York | $20 or actual bank fee |
| Illinois | Actual damages or $25 |
| Pennsylvania | No statutory cap |
| Ohio | $30 or actual damages |
| Georgia | $30 or 5% of check amount |
| North Carolina | $25 |
| Michigan | $25 |
* This is a summary. Always verify current state laws before setting fees.
Sample NSF Fee Lease Clause
DISHONORED PAYMENTS: If any payment made by Tenant is returned for insufficient funds, stop payment, or any other reason, Tenant shall pay a Non-Sufficient Funds (NSF) fee of $_______ in addition to any applicable late fees.
After two (2) returned payments within any twelve (12) month period, Landlord may require all future payments be made by certified funds, including cashier's check, money order, or approved electronic payment method.
This NSF fee is in addition to, and not a replacement for, any late fees that may accrue if the bounced payment results in late rent.
NSF Fee vs. Late Fee: Key Differences
Best Practices for Landlords
Include in Lease
Specify exact fee amount and circumstances
Stay Within Limits
Check your state's cap before setting fees
Keep Documentation
Save bank statements showing your NSF charges
Require Certified Funds
After 2 bounced checks, require money orders
Offer Electronic Payment
ACH reduces bounced checks significantly
Notify Promptly
Tell tenants immediately when a check bounces
For Tenants: What to Do When Your Check Bounces
If your rent check bounces, act immediately. Contact your landlord right away to explain the situation and arrange replacement payment. Most landlords appreciate proactive communication and may waive the NSF fee for first-time incidents if you act quickly. Bring the replacement payment in certified funds (cashier's check or money order) to demonstrate reliability.
Be prepared to pay both the original rent amount and the NSF fee. If the bounced check caused your rent to be late beyond the grace period, you may also owe a late fee. Review your lease agreement to understand all applicable charges. If you dispute any fees, request documentation showing the landlord's actual bank charges.
Preventing Future NSF Issues
Set up automatic rent payments through your bank's online bill pay or your landlord's payment portal. This ensures rent is paid on time from an account with sufficient funds. Keep a buffer of at least one month's rent in your checking account to avoid overdrafts. Consider setting up low-balance alerts with your bank to notify you before funds run low.
If you're frequently overdrawing your account, explore overdraft protection through your bank, which links your checking account to a savings account or credit line. While this may involve small fees, it's typically much less expensive than NSF fees from both your bank and your landlord.