JUNE 2012 LANDLORD ADVOCATE

This Months Video Topic:

Lead Article:

Where’s my security deposit? – How to best deal with this inevitable end-of-lease question.

Security deposits are a wonderful tool to protect the landlord from a tenant’s noncompliance with the lease and governing statutes. They can also be the source of undesired conflict, delay, and additional expense for the landlord when trying to regain possession of the unit as the tenancy ends, whether by mutual agreement, the tenant’s unilateral action, or a summary process case. The key is to regain possession in the quickest timeframe, at the lowest cost, and with the security deposit intact for use to address any problems with the tenant and the unit.

Landlords report that security >deposit-related conversations start with the tenant seeking confirmation that the landlord will return the security deposit once the tenant vacates and returns the keys. Landlords often respond – correctly, but maybe not advisedly – that it may not (or will not) return the security deposit because of potential (or actual) property damage, unpaid rent, late, or maintenance/repair fees, and/or legal fees. If the tenant has damaged the unit or not paid everything due to the landlord, the tenant may react angrily because of a belief that they have a “right” to the return of the security deposit, regardless of how things end with the landlord.

Upon realizing that the landlord will modify its position, the tenant may look for other ways to penalize the landlord. For example, if the tenant is still living in the unit or has not completed vacating, the tenant may force the landlord to complete an actual eviction to regain possession of the property. While this may be
counterproductive to the tenant from a financial standpoint (by increasing what the tenant owes the landlord), it seems to make some sense to tenants – we sense that they see it as a chance to exert some semblance of power over the situation. Regardless, this is counter productive for the landlord, who usually just wants possession of the unit – and some compensation from the security deposit – to address the problem tenant’s situation.

Here is our suggestion for handling the “security deposit return” question to avoid this problem. When asked about the security deposit, we recommend that landlords answer with language similar to: – State law says that we cannot touch or address the security deposit until after you vacate and return they keys, and we do
a move-out inspection. We must return your security deposit plus interest, or explain in writing why we kept some or all of it, as long as you give us your forwarding
address in writing, usually within thirty (30) days. So, we will address your security deposit when you move-out.

The idea is to delay the conversation about the security deposit and to get the tenant to agree that you cannot address the subject until after the tenant has moved-out and you have conducted a final move-out inspection. A tenant who has moved somewhere else is usually more interested in ending their interaction with
the landlord, and thus more likely to simply return the keys, than to have an argument about something that the landlord has thirty (30) days to address. The advantage for the landlord is that this position accurately reflects the law.

Speaking of the law governing security deposits, landlords should not act like attorneys and try to explain every detail of the law to the tenant, particularly what the landlord may harge against the security deposit. The security deposit statute obligates the landlord to return the security deposit plus interest after the tenancy erminates – less the value of any damages which any . . . landlord . . . has suffered as a result of such tenant’s failure to comply with such tenant’s obligations. – This is the law – tenants are supposed to know it, just like landlords – and landlords have no legal obligation to explain it to tenants.

If the tenant persists. landlords can end the conversation by referring to the lease, particularly if the landlord took our advice in our February 2009 article “How secure are your security deposits?” to use clarifying lease language to detail how and when the landlord can use the security deposit. If your lease contains such language, you have already provided a sufficient explanation to the tenant about how and when you can withhold money from the security deposit. Remember, the tenant signed the lease and has accepted and agreed to its terms – reminding the tenant of this fact can be a powerful way to eliminate disputes at the end of the tenancy.

We also covered other keys points about security deposits in our February 2010 quick tip “Handling security deposits,” which landlords should review at least once per year.

Contact your landlord attorney if you have any questions about security deposits and their return or proper accounting or if your business operations require a different approach than described above. Remember, the goal is to increase the likelihood that you regain possession at the lowest cost and aggravation, and then have any battles over the security deposit with the former tenant.

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Quick Tip:

Better decisions through better time management

We’ve all made decisions and choices where we later questioned our prior reasoning. In the book Sway: The Irresistible Pull of Irrational Behavior, the authors describe why we often find ourselves making or repeating decisions based on the sway of irrationality (click here to read more we’re written on the subject of “sway”). Other times it’s simply just a matter of time. Not that it’s an eventuality, but it is literally a matter of time, how we perceive it, and how we manage it around us.

Often, we are faced with making decisions but don’t have the luxury of perfect information and endless time to evaluate it. We experience a sense of pressure to make the decision because we are trying to beat a deadline, to arrive promptly, or feel other priorities need more the limited time we have available. The net result
is we make questionable choices. I undergo this experience most often when I am driving to a scheduled meeting. Perhaps it’s my past military experience or some other historical relationship with timeliness, but scheduled meetings loom over my head and create this pressure to which I refer. I recently had this experience while driving to just such a meeting. I scheduled plenty of time to arrive promptly but got a late start. Since I had a lengthy drive ahead of me, I chose to make up the time in the car by traveling faster than I normally would. I felt the pressure of the appointment “time” and chose to increase my own personal risk just to be on time. Instead, a call to my destination would have revealed that the person I was meeting was also running late and was, at that very same time, rushing to make the same meeting on time.

I’ve slowed down since then, making many more things less a matter of time. I’ve also learned to avoid the pressure time creates. Both have helped me make better
decisions, and, for that matter, get a great deal more done in the same amount of time.

Since this tip was first written, I also learned an even more valuable skill than the time management skills that I acquired – patience. While “learned” may be a stretch at this point, I’ve identified a skill that I’d like to acquire and perfect and determined that its value has many additional benefits which I’d like to enjoy. So, along with working on my time management skills, acquiring patience, even for myself and my mishaps, is another goal that will help with the better decision making.

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DISCLAIMER:

The reading of this newsletter does not form an attorney-client relationship. The contents of this newsletter are for informational purposes only and do not constitute legal advice. Nothing in this newsletter is intended to imply or predict the outcome of any legal matter that you may be considering or be involved in. The Landlord Law Firm makes no warranties of any kind regarding the information contained in this newsletter.