BiggerPockets

I have some college students that have informed me that they are moving out, there lease is not up until the beginning of August and they are leavig next week. They have been verbally informed that they do nto get there security deposit back. Yet they want to debate the issue. My question, can I legally withold the deposit for breaking the lease?

Hi Brian, the lease states that the tenancy is from 8/11/2009 - 8/11/2010. States that security deposit will be returned at the end of the lease term, and tenants need to give a 30 day notice of vacating or forfeit their deposit.

Why even bring up the subject at this point in time? I know, you're a bored, filthy rich landlord needing a little drama in your life! :lol:

Normally, and I would assume this applies in NC, the LL has a certain amount of time after a tenant moves out to determine charges, if any, to apply against the deposit. After tenant damages are addressed, any remainder can be applied to lost rent due to breaking the lease, lack of notice, etc. This is an activity that happens after they move out, not when notice is received.

My suggestion is to let that sleeping dog lie. Let them get the bad news after they are gone and can no longer do any damage. When you send the letter explaining why you're not refunding any of their deposit, make sure your letter is supported by your lease, their notice and NC law. By bringing this to their attention now, they're going to want to argue, and realize there is no reason what-so-ever to leave the place clean and may even do damage as their going away present to you. What fun.

As long as they are in the apartment, my response is always "your deposit will be returned in accordance with the lease agreement and state landlord laws regarding the return of a deposit. Until you move, we won't know. I suggest you leave the place as clean as possible and damage free to ensure you get every dollar back you're entitled to."

They've already decided to move and holding the deposit over their head is not going to get them to stay. That they haven't given a 30 day notice, or made the notice in writing, you still haven't adressed. My response to their verbal and very short notice would be to keep mum on the deposit, and simply ask that they put their notice in writting (usually a requirement, anyway), signed by all the tenants and giving the date they will be out (protects you), then let them know you want to start showing the apartment before they move, with proper notice, and ask them to make sure the apartment is clean, and that they not be there for the showings. It avoids the deposit issue, protects you, shows you are working with the situation and hopefully, they will keep the place clean and it will be clean and in good shape when they leave.

And, know your local laws. Deposit return laws are different in different states. You should be able to find the requirements of returning a deposit in NC by doing an internet search.

No Bryan, they call me for everything from small ( smoke detectors beeping), to larger( toilet leak). Had a meeting with them, and let them know chang the batteries in the smoke detector, might be advisable to loose the mini frig in one of their rooms as it uses as much current if not more than the regular size one in their kitchen, i.e. (this is after they complained that something must be wrong with the systems at the house because there utility bill was high in the winter. One moved out and the other one said that she could not afford the rent alone and could not find another roommate. Whereby both broke the lease.

You said they do not get their security back if they leave. For what reasons?

I thought the intention of security was to insure against tenant property damages and expenses incurred due to tenant wear and tear?

I have a clause in my lease that says "The security deposit is not a payment of rent and may not be applied toward any rent or fees." Which protects me from tenants trashing the place then skipping on the last month of rent.

But because of that clause I won't be able to keep the security to cover missed rent.

Do you have a clause that specifies you will withold security if they do not perform under the lease?

I'm thinking of adding a similar clause if RI allows it.

Originally posted by Ryan A.

You said they do not get their security back if they leave. For what reasons?
......
I have a clause in my lease that says "The security deposit is not a payment of rent and may not be applied toward any rent or fees." Which protects me from tenants trashing the place then skipping on the last month of rent.

But because of that clause I won't be able to keep the security to cover missed rent.
..........
I'm thinking of adding a similar clause if RI allows it.

Ryan
Most states understand when a MTM tenant doesn't give a 30 day notice, or when a lease is broken, that this "breach of contract" or possibly even a violation of state statutes, causes financial harm to the landlord in the form of increased costs and lost rent. LL/Tenant laws protect both LL and tenant, and tend to spell out what is required, is not required or is/is not allowed. There are forbidden clauses that could render your agreement null, there could be, as in Wisconsin, standard clauses, non-standard clauses, and forbidden clauses. You may or may not be able to state in your lease that the tenant must pay for professional carpet cleaning (WI forbids it), but still, I can charge and deduct for Stanley Steamer when the time comes.

In the case of breaking a lease with a very short notice, the tenants, by defaulting, are forcing Rodney to spend time and money advertising and showing, in addition to experiencing a vacancy (lost rent). That is Rodney's cost because they defaulted, not he, on their agreement. It's enough to make you scream, "there ought to be a law against that!" I think you'll find there is, and Rodney is entitled to compensation for his losses caused by the tenants, and you are, too.

Even if you have the "Deposit shall not be applied against rent" clause in your lease, I think you'll find the State law will still allow you to apply any remaining deposit, after subracting for damages, unpaid rents or other charges and fees owed. The "not be applied" clause, as you correctly stated, is meant to prevent the tenant from pulling the "Take the last month's rent out of the deposit" schtic, and you'll likely find that is one of those things already forbidden by state law, unless "agreed upon by both parties." You might also insert the word, "Tenant" in front, just to be clear, but I don't include it in my lease because it is already state law.

It really can't be understated: Know your state's LL/Tenant laws. Know your lease protects you, too, and is not contradicting state law. Know your rights and what you are entitled to, and the rights of tenants. Every time I hear someone say "I gotta see if my state..." or "if RI allows it," or (I think) your misconception about the "not be applied" clause, I cringe. You gotta know this stuff for your own protection. Not knowing will cost you money, even if you don't know it is.

I had already evicted several tenants before finding out that for the unpaid rent from the end of the 5 day notice until the day they were actually evicted, I was entitled to double the rent amount, all I had to do was ask for it, and I didn't know to ask. While a judgement rarely gets paid anyway, I have used that rule, along with the 30-day rule (a 30 day notice is required by law, therefore the LL is entitled to 30 days rent from the time written notice is given, regardless of when the tenant actually moves) to deduct from the deposit.

The Wisconsin Dept of Agriculture, Trade and Consumer Protection published a book of about 100 pages, "The Wisconsin Way; a Guide for Landlords and Tenants." A pdf is found at:

http://datcp.state.wi.us/cp/consumerinfo/cp/factsheets/pdf/cp-127web.pdf

It contains not only the legal-speak state statutes, but the plain english explainations of who can, who can't, penalties and entitlements. I urge everyone to seek something similar for their state, and don't be afraid of talking with a lawyer.

Ralph - thanks for the reality check, you are right.
I did go over the RI Tenant Landlord Handbook again and the specifics do allow the security to be applied toward unpaid rent.

My intention was to make it clear to the tenant I will not accept the security as a replacement for their payment of current rent.

I guess I'm just out of luck there if the law allows it.

SC attorney tells us to add in the lease security deposit stands for cleaning left undone at the time of tenants' vacancy and any damage and for unpaid rents. He states one must consider both the lease and the landlord tenant act together.

They owe if they break a lease until the lease ends--one or all of them. We plan to evict as we lost Jan-April rents and the apartment was damaged (over $1000) and dirty. Must have invoices and then will file eviction on all tenants. Service is a quesion still in my mind as many students are from out of state and leave for another state right away.

Due to Obama's $8000 incentive we have had many lease breaks and if we were notified and the tenant helped in renting the apartment (left it clean and undamaged) we compromised.

I keep the security deposit if a tenant does not stay for the full term of the lease. I may make an exception if a tenant is extremely helpful in re-renting the property and leaves the property in exceptionally nice condition, etc.
I pulled this directly from the SC Landlord/Tenant Laws (http://www.scstatehouse.gov/code/titl27.htm):
(18) "security deposit" means a monetary deposit from the tenant to the landlord which is held in trust by the landlord to secure the full and faithful performance of the terms and conditions of the lease agreement as provided in Section 27-40-410.
I interpret this to mean that, if a tenant fails to perform the lease (i.e., does not stay for the full term of the lease), I can keep the security deposit.
The reason I feel this is fair is because I now have to market this property for rent much sooner than I had expected. Otherwise, what is the point of a one-year lease? I sign a one-year lease with folks because I want them to make a commitment to stay at least that long so I don't have to re-rent any time soon.
If I am wrong in thinking I can keep the deposit in such a case, I'd love to know about it.