The Check Overpayment Scam: How Fake Tenants Use "Accidental" Cashier’s Checks to Steal Landlord Cash

You list your rental property for $1,800 a month.

An out-of-state applicant contacts you. He explains that he was just hired by a local healthcare system and needs a home immediately. He submits an application, signs your lease, and promises his company will courier a cashier's check for the $1,800 deposit.

Three days later, a FedEx envelope arrives. Inside is an official-looking cashier's check drawn on a major national bank.

There’s just one problem: the check is made out for $6,300.

Before you can even reach out, the applicant calls you, profusely apologizing:"I am so embarrassed! My company’s relocation department accidentally combined my first month's rent with my $4,500 moving allowance on a single corporate check. Please deposit the check into your account, keep the $1,800 for your rent, and wire the remaining $4,500 directly to my moving company so they can load my furniture today."

You deposit the check. The next morning, you check your mobile banking app: your Available Balance has increased by $6,300.

Relieved that the money is there, you wire the $4,500 difference to the moving company.

Ten days later, you get a call from your bank's fraud department. The cashier's check was a sophisticated counterfeit. The bank reverses the entire $6,300 credit.

Because you already wired the $4,500 out, that money came straight out of your personal savings.

The Big Lie: "Available Funds" Does Not Mean "Cleared Check"

Why do banks let you withdraw money from a check that hasn't cleared?

It’s required by federal law. Under the Expedited Funds Availability Act (Regulation CC), banks are legally required to make funds from cashier's checks available within 1 to 2 business days.

However, making funds available is simply a temporary credit. It takes 7 to 21 business days for an out-of-state check to travel through the clearinghouse and be verified by the issuing bank.

When the check inevitably bounces, federal law allows the bank to claw back every penny from your account.

The 3 Rules to Never Get Burned by Check Overpayments

• 1. Never Accept an Overpayment: If an applicant sends a check for more than the agreed amount, do not deposit it. Void the check immediately and demand a new payment for the exact amount.
• 2. You Are Not a Bank for Moving Companies: Never agree to forward money or wire funds to a tenant’s moving company, travel agent, or vendor.
• 3. Wait 21 Business Days for Refunds: If a tenant cancels a lease and demands a refund of a deposited check, never issue a refund until 21 business days have passed and your bank manager confirms in writing that the check has fully cleared.

Frequently Asked Questions (FAQ)

Can a cashier's check be fake?

Yes. Modern fraudsters manufacture high-quality counterfeit cashier's checks using real bank routing numbers and genuine corporate account numbers. They look identical to authentic bank drafts.

Who is responsible when a deposited check bounces?

The account holder who deposited the check is 100% financially liable for all funds drawn against it, regardless of whether they were a victim of fraud.

What should I do if I already deposited an overpayment check?

Contact your bank’s fraud department immediately. Tell them you suspect the check is counterfeit so they can flag the item before it bounces, protecting your account standing.

Download the Free Landlord Financial Defense Guide

Download the Landlord Check Fraud Prevention Checklist (PDF)

About the Author

Mark Druckmiller is a licensed REALTOR® and Customer Care Coordinator at Real Estate One in Michigan. He is the founder of Wounded Duck Studios LLC and SCAMREALESTATE.COM, dedicated to educating housing providers on property defense and transaction security.

Disclaimer: This guide provides general business education and does not constitute formal legal or financial counsel. For specific banking or legal disputes, consult a licensed attorney or financial advisor.