Many landlords use a “dropbox” system for rent payment. But what happens if a thief steals your money order from the dropbox? A seldomly used commercial law helps renters who experience “dropbox” rent thefts. Under the Uniform Commercial Code or “UCC,” tenants who place money orders into a dropbox pay rent the moment they slip the money order into the dropbox. As a result, a landlord cannot “state a claim” or successfully sue a tenant who places the money order into the box—even if the money order is later stolen.

The Law Governing Landlords, Tenants, and Money Orders. 

The UCC governs the payment of rent with a money order. Under the UCC, once a tenant “transfers” the money order (delivers the money order to the dropbox), the landlord receives all rights to enforce the money order.[1] Essentially, a tenant surrenders the money order to the landlord the second she places it in the dropbox.[2] If the money order is stolen, the landlord’s rights to the money order give the landlord legal rights against the thief. However, the landlord lacks legal rights against the tenant because the tenant surrendered the money order and paid rent. In sum, a landlord arguably cannot recover against a tenant for “non-payment of rent” in this circumstance. This also applies to evictions based on non-payment of rent.

What to do if Your Money Order is Stolen From a DropBox?

If you are a tenant who experiences “dropbox” theft, an attorney may be able to help you navigate the legal issues. Also, to the extent possible, keep your receipts from the money order company. You can contact an attorney of your choice or call the Helpline at the Center For Arkansas Legal Services at 1-800-950-5817.

Resources:
[1] See Ark. Code Ann. § 4-3-203

[2] See Ark. Code Ann. § 4-3-420

AUTHOR: BRIA GUTHRIDGE, STAFF ATTORNEY FOR THE CENTER FOR ARKANSAS LEGAL SERVICES