Checks Returned for Insufficient Funds

1. Owners may impose a fee on the second time, and each additional time, a check is not honored for payment. (See paragraph 5 of the Model Lease for Subsidized Programs for more information.)

2. The owner may bill a tenant only for the amount the bank charges for processing the returned check.

HUD Occupancy Handbook Chapter 6: Lease Requirements and Leasing Activities

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Section 3: Charges in Addition to Rent

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3. Field Offices or Contract Administrators may authorize an owner to impose additional charges, if such charges are consistent with local management practices and are permitted by state and local laws.

NOTE : This paragraph does not apply to Section 202/8, Section 202 PAC, Section 202 PRAC and Section 811 PRAC projects. Owners of Section 202/8, Section 202 PAC, Section 202 PRAC and Section 811 PRAC projects cannot charge fees for checks returned for insufficient funds.

• C. Damages

  1. Whenever damage is caused by carelessness, misuse, or neglect on the part of the tenant, household member, or visitor, the tenant is obligated to reimburse the owner for the damages within 30 days after the tenant receives a bill from the owner.

  2. An owner may deduct accrued, unpaid damage charges from the tenant’s security deposit at the time of move-out, if such a deduction is permitted under state and local laws.

  3. The owner's bill is limited to actual and reasonable costs incurred by the owner for repairing the damages.

• D.