Anyone who has ever been in the business of real estate or absolutely any other type of business at all knows that there is a chance of receiving that occasionally bounced cheques. In real estate business, usually, bounced cheques happen when the tenant has to pay the rent and does not have sufficient money or funds left in their account. This situation may happen due to a variety of reasons.

However, as a landlord, getting a bounced cheque is a financial liability. It means that you have not received the funds to which you are entitled. Therefore, if a cheque that you deposit bounces, it is important to keep track of the law in place that has been structured to protect the person depositing the cheque. This is to ensure that they do not face any further losses.

What Should I Know About A Bounced Cheque?

One of the first things you should know about how to deal with a cheque bounce in UAE is as to what the law says about bounced cheques. It is absolutely illegal to issue a cheque for which you do not have the funds in UAE, similar to most other jurisdictions across the world. While the individual writing or issuing the cheque may not have had mala fide motives for having done so, and may genuinely be unaware about the amount of funds that they have – this is still no excuse. While earlier there was imprisonment for those who issued cheques that could not be cleared, now, the issuer will instead have to pay a monetary penalty. These penalties are all computed in AED.

• If the cheque value is 50,000AED or less, a fine of 2,000AED will be levied.
• If the cheque value is over 50,000AED but less than or equal to 100,000AED, a fine of 5,000AED will be levied.
• If the cheque value is over 100,000AED but less than or equal to 200,000AED, a fine of 10,000AED will be levied.

The switchover from imprisonment to fines has provided a less adversarial approach to deal with bounced cheques. Furthermore, given that it is possible that the cheques bounced due to a variety of reasons such as financial instability, it provides a chance for the landlord and the tenant to communicate with each other and settle out the dispute in a manner that makes it easier for the landlord to recover his dues. This is beneficial for both the lessor and the landlord as well.

One of the best things you can do for yourself if you are a landlord is hiring the service of a property management company. These companies can help with not just aspects such as the cheques bouncing, property management, help with regards to managing tenants, and a variety of other types of services. Furthermore, aspects such as vetting the tenants to ensure that they are safe candidates and that it won’t be an issue to lease to them can also be ensured if you take the assistance of a property management company. So what are you waiting for!