Haven't received rent check but tenant says it was sent/cashed

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Haven't received rent check but tenant says it was sent/cashed

Lee Brewer
Raleigh, NC · Member since 2016 · 17 posts · 3 votes

I am a newbie landlord with only 2 units to date. My new tenant in my second unit is now delinquent for the month of July.  I contacted him and he says he mailed his rent check  and it has already been deducted from his account.  I told him I have not received the check and if it was sent and cashed then it was cashed fraudulently. He is in the process of notifying his bank about the situation.  What is the best way to handle this? Not sure if I should say it's not my problem and he is now delinquent so he owes the late fee as well as the rent that needs to be paid immediately? Should wait to see if he's able to be reimbursed from his bank for a fraudulent transaction? Should I waive the late fee if it does turn out to be a legitimate claim to a fraudulent transaction? Any advice from seasoned landlords is appreciated. 

Thanks

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Greg H.Pro Member
Moderator
Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
9y

This is an easy one in this day and age. He needs to send you screenshots of the deduction as well as the front and back of the check by 430pm today or you will be sending the required notice to start the eviction process 

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  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    9y

    Definitely start the eviction process, as you can always pause later if/when you discover that this is all legitimate (I wouldn't count on it). 

    He should be able to demonstrate the check withdrawal on his bank's online banking. Ask for proof. 

    Finally, you don't have to do business this way. Require money deposited directly into your business account, electronic payment through a provider, or even cash at the door if you want to go that route. "Check's in the mail" has always been the biggest scam going. We specify the acceptable ways to pay in our lease, and mailing a check is not one of them. If you don't specify how the tenant pays, you can put up with all kinds of stupidity; I know of an instance where a tenant delivered a big box of coins to the landlord for rent payment. 

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    9y

    If he used online bill pay, when they send the check it automatically deducts from their account before its cashed. So first thing to check is if he did this, then find out if the check is actually cashed.

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  • Nick G.
    Investor · Moorpark, CA · Member since 2016 · 248 posts · 191 votes
    9y

    @Lee Brewer

    I'm not a seasoned landlord, but I am very seasoned with writing leases and dealing with tenant-landlord issues from my work as an agent. 

    Does he have a history of being on-time? I might work with him a tad more if he does. Regardless, it's not your problem. The lease he has with you doesn't say that the tenant needs to make a good solid effort to send you rent - it says that the landlord needs to receive rent. Period. 

    I would talk to him and say that you want to work with him in order to get the July rent and future rents to you safely, and express empathy and wish him well in recovering his lost rent payment. You might suggest to him to switch to a direct-deposit method of sending you rent in order to make sure he never has to worry about it again (you might even sort of insist on that.) 

    I might offer to waive his late fee once you receive his July payment, and you might also make that contingent upon him setting up some sort of automatic electronic payment system in order to make sure he doesn't have to worry about it again.

    Bottom line, he 100% still owes you July, and ASAP - but I wouldn't even make a point of calling him out on it, it should be such an obvious thing that you talk about it casually and matter-of-factly, and then go about it from the attitude of trying to protect his security so that it doesn't happen again for his sake. 

    How you handle this situation will tell the tenant was is and is not acceptable for the remainder of their lease, so you want to make sure you are fair, but firm.

    Edit: What JD said!

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  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    9y

    This is an easy one in this day and age. He needs to send you screenshots of the deduction as well as the front and back of the check by 430pm today or you will be sending the required notice to start the eviction process 

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  • Alexander FelicePro Member
    Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
    9y

    "Check is in the mail"

    Literally one of the the oldest scams created. You count rent checks as deposited, not as mailed (or claimed to have been mailed).

    Follow your lease, if it says eviction process starts on the 5th day, then do it. Don't let his poor banking processes become your poor landlording process. Stick to the lease

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  • Joshua R.
    Investor · Chicago, IL · Member since 2015 · 87 posts · 42 votes
    9y

    @Lee Brewer Your tenant should be able to provide you with the electronic receipt and images of the check being cashed if this is legitimate. I would go forward with the initial steps of eviction. This sounds like a nonsense excuse to not pay you the rent. You should consider setting up direct deposit for rent payments going forward for your tenants. 

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  • Shawn M.
    Investor · New Haven, CT · Member since 2012 · 285 posts · 175 votes
    9y
    What does your gut say? Is he a professional where there is a possibility of truth or are you a class C tenant? The former I'll work with you the later I'm not.
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  • Andrew Acuna
    Investor · Mission, TX · Member since 2017 · 220 posts · 135 votes
    9y
    Lee Brewer either he gives proof or I would treat it like non payment. If it is the 1 in a million tenant who's not lying it should be easy to prove in which case I'd definitely work with him. I would stop accepting checks immediately! Bare minimum give them some deposit slips from you account and it's on them to go to the bank. I would personally suggest cozy for your situation. I use it and it's awesome!
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  • Samantha Klein
    Investor · Monroe, WI · Member since 2015 · 691 posts · 610 votes
    9y

    @Lee Brewer Sounds like a BS story to me. I would tell him that you do not have the rent therefore it is late. Set up a Cozy account and get yours tenants on it. It is way easier and there is no chance of losing the rent in the mail or "someone" else cashing it. 

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  • Robb AlmyPro Member
    Investor · Fredericksburg, VA · Member since 2014 · 123 posts · 65 votes
    9y

    On this one I say "Show me the money!"  You need proof  Not your problem- one I would say the tenant needs to address.  The onus is on the tenant.  Best of luck collecting. Hope it goes well for you!!  

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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    This is a standard BS excuse from tenants. Always assume a tenant is lying in regards to late rent payments. I have heard them all. As soon as a tenant begins a excuse I interrupt and politely state that their personal life is none of my business I do not need to know the reasons.. This usually stumps them since they believe their excuse justifies paying late. 

    As for the late fee does it state in the lease that the tenant does not have to pay if they have a good excuse. Late is late, charge the fee and let him work it out with his bank.

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  • Vincent V.
    Real Estate Investor · Austin, TX · Member since 2015 · 65 posts · 50 votes
    9y
    Does your lease state that the rent must be received by the landlord by the due date? Ask him for proof and post a notice pay includes late charge or quit to get the process started. It's a business and should be treated as such period. Good luck!
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  • Lee Brewer
    OP
    Raleigh, NC · Member since 2016 · 17 posts · 3 votes
    9y

    Thanks for the great advice everyone. We actually do have an online portal setup for our tenants. He refuses to use it because there's a $2 convenience fee. I told him from now on I will waive the convenience fee if he does it through the online portal. Obviously this is contingent upon him making good on July rent. Gave him til tomorrow to make good before I proceed to the next step. 

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  • Chris Purcell
    Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
    9y

    @Lee Brewer

    Get proof

    If cancelled check in your name hit his account then yes do the right thing

    If not come back 

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  • Randall Brown
    Investor · Santa Cruz, CA · Member since 2016 · 71 posts · 39 votes
    9y
    Originally posted by @Russell Brazil:

    If he used online bill pay, when they send the check it automatically deducts from their account before its cashed.

    Not all banks handle it this way. 

    Some banks will move the funds from the customer's account into a intermediary payment account and write the check from there, so that the payee doesn't see the payer's account information. Those banks will indeed charge the payer's account upfront.

    Some banks will actually print a check with the payer's  routing and account number, and the account will not get charged until the check is deposited.

    On the original issue. I had that happen. Rent was supposed to be deposited in one of our accounts. I don't see the deposit. Tenant swears that the check has hit his account. Our tenant had been on vacation and given the check to a friend who was supposed to deposit it in our account on the 1st. The friend took a fat sharpie and wrote his name over my name, and was able to deposit it into his account. I suspect he deposited it at an ATM. 

    Imagine this, our tenant had written the entire check with signature using a ball pen. Then the payee name is written with Sharpie. Our tenant found it out when reviewing the cashed check image on his bank's web site.

    1Reply
  • Matthew Olszak
    Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes
    9y
    Originally posted by @Thomas S.:

    This usually stumps them since they believe their excuse justifies paying late. 

    Absolutely. They spent the past 3 days rationalizing that this was a great excuse and thinking about how well the conversation will go for them for it to all collapse in an instant. When these excuses pop up, I immediately ask for proof or suggest they request a loan from family/friends until their problem can be resolved. If there is any break in their voice or any inclination on their part that they will "try" or "maybe", I flat out say "just be straight with me, was the rent sent or not". 100% of the time the answer is yes, and 100% of the time that's been a lie.

    Its amazing how bank accounts are hacked, checks are lost, mail isn't collected/lost, fraud happens, medical emergencies occur, etc exactly 1 day after rent is due, but the other 30 days of the month nothing ever happens.

    0Reply
  • David Faulkner
    Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    9y
    Originally posted by @Greg H.:

    This is an easy one in this day and age. He needs to send you screenshots of the deduction as well as the front and back of the check by 430pm today or you will be sending the required notice to start the eviction process 

     I agree with all this, but I'd switch up the order of operations:

    1) Send required notice to start eviction process; do it right now.

    2) Tell the tenant that they need to send you the screenshots of the deduction as well as the front and back of the check by 4:30pm today in order for you to STOP the eviction process, which you have already started.

    3) If they do not comply, continue the eviction process until they either comply with payment in full (including all late fees) or are out of your property. Otherwise, if/when they comply, stop the eviction.

    1Reply
  • Shaun Patterson
    Property Manager · West Palm Beach, FL · Member since 2012 · 296 posts · 143 votes
    9y

    I would add one more point. Don't bend the rules for this tenant. If you charge fees for making payments and he refuses to pay them that's on him. That fee is the charge associated with your cost for the software and his ease of access. 

    2Reply
  • Junon Celestin
    Investor · Philadelphia, PA · Member since 2017 · 64 posts · 22 votes
    9y

    Regardless it is late your check should be at hand on time and on the hour stated on your lease. For instance July 1st,  2017 to July 5, 2017  by 1:00 pm. Any time its late after July 5, 2017 after 1pm its  a 50.00 fee by July 15 an eviction process will begin. Any deposit will not return.  Next time please open an account where payment can be received.

    1Reply
  • Junon Celestin
    Investor · Philadelphia, PA · Member since 2017 · 64 posts · 22 votes
    9y

    Ohh they can have  certified mail if they sending it . DO NOT PLAY NICE.

    0Reply
  • Ray Ebert
    Warminster, PA · Member since 2016 · 30 posts · 11 votes
    9y
    I've had something similar happen to me,not with a rent payment but payment for snow removal service. the customer generated the check through his online bill pay and the money was deducted from his account but the check never made it to me. He sent me screenshots and copies showing that the money was deducted from his bank but the check was never cashed and after several weeks eventually was sent back to him and he just ended up issuing a new payment to me.
    0Reply
  • Amy A.
    Portland, ME · Member since 2012 · 616 posts · 550 votes
    9y

    So, new tenant and new landlord... he's testing you.  This is your chance to set the tone for the rest of his tenancy.   It sounds like you are handling it well.

    0Reply
  • Lisa A.
    Sawyer, MI · Member since 2013 · 19 posts · 4 votes
    9y
    Originally posted by @Russell Brazil:

    If he used online bill pay, when they send the check it automatically deducts from their account before its cashed...

    Not all banks do this. At my bank, the money comes out of the account when the check is presented to be cashed, just like if you mailed a check yourself.

    0Reply
  • Brent Coombs
    Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
    9y
    Originally posted by @Lee Brewer:

    Thanks for the great advice everyone. We actually do have an online portal setup for our tenants. He refuses to use it because there's a $2 convenience fee. I told him from now on I will waive the convenience fee if he does it through the online portal. Obviously this is contingent upon him making good on July rent. Gave him til tomorrow to make good before I proceed to the next step. 

    Three days later... update? 

    0Reply
  • JR T.
    Financial services executive · Frederick, MD · Member since 2015 · 609 posts · 341 votes
    9y

    Of course it's not your problem. It's the tenant's responsibility to see that their rent is delivered to you by the first of the month. 

    I'll note that some bank's billpay systems deduct the payment when they mail a check or on the expected date of payment delivery. This does not mean that the check has cleared just that the bank impounded the money. But not your problem, tenant owes the late fee and if they used bill pay their bank will refund it to them.

    0Reply
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