There are considerable benefits to collecting payments for rent via cheques rather than cash payments. A landlord only needs to consider unfortunate instances in which following receiving cash for a rental, he or she is robbed.
Unlike cash, cheques for payment of rentals can be secure. However, they may also bounce. The easiest way of handling bounced rent cheques is following a method that involves the identification of the reason for the bounced rental cheque.
Bounced Rental Cheques in Dubai
In Dubai, it’s long believed bouncing cheques can send you to prison. This is not entirely true as it will depend on the reason as to why a cheque issued by a renter bounced.
Common reasons why cheques bounce:
- Insufficient funds;
- Issuer of cheque had canceled the cheque with the bank;
- Tenant has closed the bank account upon the issuance of the cheque;
- Money is in the bank account, but pending transactions took the account balance that is below the value of the cheque
Non-illegal reasons for bounced rental cheques in UAE:
- Name written on the cheque has been misspelled;
- Signature in the cheque has some irregularities;
- There are parts with the cheque issued by the renter that are overwritten
Once a rental cheque has bounced in the UAE, you will have two routes to choose: file a criminal or a civil case.
Also Read: Laws regarding Bounced cheques in UAE
Criminal Case for Bounced Cheque in UAE
When raising a criminal case for a bounced rental cheque, you'll receive a letter that is given by the bank stating the cheque of the tenant has bounced. The letter will come with a reason as to why it occurred.
If the reason mentioned by the bank letter is under illegal reasons, then you, as the landlord, has the right in raising or filing a criminal case against the cheque issuer. Take both the letter and the cheque that bounced to Dubai police station or use the app of Dubai Police so you can raise a case. Make sure the police station you go to is within the emirate where the bounced cheque was issued.
Wait for the police to contact you as they will have to talk to the bank first and verify the information with the case filed, such as the holder of the bank account, account number, as well as the money that is in the account.
As soon as the police has all the information that they need, you will be contacted as well as the person that issued the bounced rental cheque. The person who issued the bounced check will be summoned to appear in the station. The cheque issuer has a right in issuing the amount that’s outstanding in order to clear the liability.
If the cheque issuer does not have any money upfront, there's a chance for the police station to allow a certain period of time for the issuer of the cheque to possess the money owed. This will greatly depend on the amount in question. If it’s larger, then there’s also a chance that the check issuer won’t be allowed any time to settle the debt.
If the bounced cheque issuer doesn’t have any money, and police won’t allow time for the clearance fo the amount, the cheque issuer will be detained. The police will be selling the file onto a public prosecutor who will investigate the matter. The prosecutor may agree to the release of the issuer of the cheque on bail as the investigation is carried out. As soon as the investigation has been completed, it will then be referred to the criminal court. The criminal court is where the case will have a judgment.
The judgment will be prison sentence for a month to three years maximum, depending on the bounced cheque’s value. Prison time only comes into effect when the value of the cheque is more than Dh200,000.
Here is a more In-depth look at the consequence for being unable to settle debt:
- 0 to Dh49,000 – fine of Dh2,000 and no prison time
- Dh50,000 to Dh99,000 – fine of Dh5,000 and no prison time
- Dh100,000 to Dh200,000 – fine of Dh10,000 and no prison time
- More than 200,000 – potential prison time
Fines don’t go to claimant as the fees will be payable onto the Dubai government. The government won’t force the issuer of the cheque in paying the bounced cheque’s value to the claimant with the criminal case. As soon as imprisonment or fine is issued, the decision of the court will be final.
Civil Case for Bounced Cheque in UAE
For a civil case, if the Dubai Court will rule against the tenant, then the issuer of the cheque will be made to settle the debt within the specified time frame. The issuer of the cheque’s assets may also be frozen or sold off in order to settle the bounced cheque’s value.