Tenant claims they paid rent in cash and that it was stolen from a mailbox. What should I do?

Question

I own a duplex, live in half, and rent out the other half to college students. I have just made a mistake that cost me $750.

One of my tenants was late paying her rent. I'd thought it was still late, but she informed me that she put it (roughly $750 in cash) in my mailbox while I was out of town for three weeks. She claims she told me that she was doing so, but she did not. (I certainly would have asked her not to!) Anyway, the money was not there when I returned and I am out $750.

One lesson I have learned is to insist on either a check or cash payment in person. (And, to not let late payments slide for some reason.) But in the meantime, I am out $750 and I have to decide what to do about it. I see at least three options:

1. Eat the loss. Annoying, although I can afford it.

2. Say that I never received the rent and insist on its payment.

3. Report the theft of $750 to my home insurer. (I am not sure if they would pay such a claim, or if my premiums would go up.)

I am guessing that I am stuck with (1) but I am wondering if (2), (3), or something else might be a realistic option? (I might add that I'm not prepared to go to court.)

Update. Thanks to everyone for their responses. After reading here, and also getting advice from a local property management company, I decided to ask for the payment in full, but say that I don't need it right away. We haven't made arrangements yet, but my tenant has acknowledged responsibility and it seems that I've avoided burning any bridges.

I also hired the property management company. I am leaving town for six months next year, so this was about to become a necessity soon anyway, but I immediately realized that for someone as scatterbrained as me their services are a godsend and I should have hired them long ago. This situation never would have occured if I'd done so. I've made it clear that keeping the tenants happy and maintaining the property in good condition are my first priorities, and that I will be backing these claims up with my pocketbook.

Answer 1

I'd say your tenant is out $750, not you. How you handle it is totally personal preference.

If you want to be the super-nice landlord and eat the loss this one time, then you might gain some karma and hopefully they'll be awesome tenants for the remainder of their stay. Are they the kind of tenants you want to be nice to because they deserve it?

You (and she) have no way to prove she ever actually tried to pay you. Sound like she is learning a $750 lesson. "Don't leave cash in a mailbox, and always get a receipt for rent paid."

Your insurance company would likely not pay out as it'd be below a typical deductible and you can't really prove the money ever existed. You'd be better off just taking the loss.

Think about it this way: How would you expect a bank or utility company to respond to this situation? "Yeah, I left my mortgage as a cash-filled envelope on your doorstep. You didn't get it? I told you I'd do it!" Guess who's paying double mortgage and a late fee?

You're not stuck with option 1, you're choosing to do it. She could refuse and fight you on it, which might not be worth the headache and potential small-claims court. But you're entitled to receive the rent and she is obligated to pay it. And "paying it" means making sure you actually receive it.

Answer 2

Cash should never have been placed in the mailbox in the first place; this is what checks are for.

I would be a bit surprised if that constitutes your accepting payment, but I Am Not A Lawyer. You need local legal advice; this is the sort of thing where local rulings matter.

Definitely report the missing money to the police, no matter what else you do. You do not have to give them an opinion on whether this was a theft or an attempted fraud; just give them the facts that the tenant says they left money in the box but you didn't find it there.

Answer 3

This is fairly simple, actually. You should insist on payment for the rent payment you never received and stop accepting cash payments.

If you want to be nice, and believe the story, allow the tenant additional time or payment in installments for the missing $750, but this is a textbook example of why it's a bad idea to transact with cash. Insist on cash equivalents that are traceable and verifiable - check, money order or cashier's check, made out to you or your company name.

Also, for what it's worth, you are not out $750, unless you choose to be. Your tenant is. "I put cash in your mailbox" is not proof of payment, and doesn't fly as payment anywhere. If it did, I'd never pay any of my bills.

Answer 4

I used to be the sort of person who would tell you that I've left money for you somewhere and in fact not have done so, and I also used to be the last person you'd expect to do something like that. I've not done this exact thing but I've done similar. Not gonna go into detail but at that time I was in a state of poverty, barely able to buy food and drink, and the money I saved by "conning people" in similar ways was spent on food and warmth.

Personally, I think she's going through a very hard patch financially and as such has done exactly that. Me? I'm not a landlord and I'm probably far too generous. I would explain that I think she's lying but let it slide this month. Clearly a property owner is more financially capable of soaking up this expense than a tenant.

On the other hand, you don't become a property owner and landlord by letting people get away without paying their rent.

All in all, I would probably push for a 50/50 decision. She pays half rent this month which alleviates her finances a bit if she is genuinely in trouble and has lied, and you still get something for your efforts. If you're lucky, when you suggest it she will come clean. I would make it clear if you do or don't believe her, as she may well confess if you express your doubts. If she does, I wouldn't hold her to paying the full amount unless she offers to do so.

Also, make it very obvious that this can and will not happen again. Next time, she gives you cash or uses a banking service. Goes without saying I guess.

You should note that legally speaking, by accepting anything other than full payment you could be acknowledging that she did attempt to make a payment and any future legal cases will not consider that favorably for you. I would strongly recommend discussing this with a solicitor before agreeing to anything other than full payment.

Answer 5

It's very possible that someone would lie to their landlord/landlady, but not be prepared to lie to the police. So here's what I would do.

Advise your tenant that since her money has been stolen from your letterbox, she should report the theft to the police.

If she refuses to report the theft to the police, then her story is probably a lie. In which case, treat the rent as deliquent and demand payment in full. Invoke whatever kind of recourse is available in your jurisdiction.

If she goes ahead and reports the theft, then it's very likely that her story is true. It's probably in your interest to stay on good terms with such a tenant, so you could offer to split the loss with her. But let her know that this is a one-time offer, and you won't be so generous again.

Answer 6

This does sound a bit implausible, even if it is true it is pretty grossly irresponsible and you probably shouldn't just let it slide...

However there is no real benefit in wading in with accusations, I suspect that the most likely scenario is that your tenet simply didn't have the money and was looking for a way to delay payment. This may well not be particularly malicious towards you, they may just be unable to pay and need a bit of room to maneuver.

In this case the wise thing is to challenge them but without forcing them to admit that they might have lied, perhaps by suggesting that they might have been mistaken about dropping off the money but it's no big deal and negotiate a resolution. In these situations where it is one persons word against another giving them the opportunity to save face often pays off.

Equally you want to make it absolutely clear that putting a wad of cash in your mailbox is not an acceptable way to pay.

Answer 7

Your tenant made a mistake. You deal with this exactly as you would deal with a delinquent tenant, which is a hard and sticky question that involves you, your lease, your relationship with the tenant, your priorities, your values, local laws, your estimation of tenant's honest and creditworthiness, and so forth.

It's not an easy question. It just falls under the question of how to deal with delinquency that happens to involve the circumstance of allegedly paying cash and having it stolen, which is a hard question.

Answer 8

I don't have a crystal ball but chances are your tenant is definitely lying. Rent was late and now the money intended to cover the rent; miraculously is lost in the mailbox.

Anyhow, you were already nice to tolerate the late "payment". Keshlam's option 1.5 in the comments above is the ideal way to settle in which both parties have learned a lesson and are at a loss. Demand the rent payment but settle for half as a one time courtesy.

If this continues or this tenant has shown shady predicaments such as this, you should look for legal means to evict this tenant.

College students are very creative and who's to say this won't happen again? "The neighbors dog took my wallet."

Answer 9

Personally, it is the tenant's stupidity to leave cash and not get a receipt. If it were me, I would demand payment. But then $750 to me is a lot more than it may be to others. This is entirely a personal decision, legally I don't think the tenant has a leg to stand on because they have no proof they actually paid you, regardless of how or where they 'left it'.

Answer 10

Question: I live in half of a duplex together with other college students. I put my rent (roughly $750 in cash) in the landlord's mailbox while he was out of town for three weeks. I told him ahead that I would do this, but he claims I never did, and he would have asked me not to. Anyway, now he claims the money was not there when he returned and I still owe $750.

Answer: Well, that's tough. It could be that the money was stolen from the mailbox. It could be that the landlord pocketed the money and is trying to scam you. Your problem is that you have no receipt, and no evidence at all that you paid the money. There's little you can do other than paying up (again) and learning from this expensive lesson.

Answer 11

It sounds extremely fishy to me. Who has $750 in cash in his pocket and uses it to pay rent??

I would ask the tenant to show a statement from her checking account which shows that she took out that much cash in the days before the 'payment', and if she cannot provide it (or another convincing explanation), I would consider it a lie and request payment.

Answer 12

Since the tenant reportedly left money in your mailbox, and now the money is missing, a crime must have been committed. As such, have her file a report with law enforcement and provide you with a copy of that report.

Remind her that, for her safety, it is best to file the report during daylight hours with other people present.

You didn't make it clear to your tenant the methods in which she could provide payment. That was a mistake. At the same time, her decision to leave cash in a mailbox was foolish.

If she is willing to file a report with law enforcement and provide you with a copy, tell her that you will split the loss and only require half her rent as a one-time courtesy. Make it clear that you are losing half the money too.

If she is not willing to file a report, require the full rent.