How to handle a tenant who is using their security deposit as a last month's rent

Question

Hi all, we have two tenants (I'll call them Jane and Alice ) on a 1-year lease which began in December.

They did several things to violate our lease agreement which included 1) bringing in a 3rd tenant without telling me (let's call him Rick); and 2) Rick dumped garbage bags on another house we own (an Airbnb on the same property).

I wrote them 1.5 weeks ago saying this won't work out, and offered to terminate the agreement and waive any early termination penalties. They agreed to look for another place and we'd settle on a move-out date once they found a new place. At this time they asked that I pay them their security deposit on the date of any final inspection, to which I agreed.

With the rent due on April 1 and not having received payment, I wrote them today. They mentioned they found a place for a May 1 move-in and said they'd not pay April's rent, using their security deposit. They also agreed to let me show the place to new tenants with a 48-hour notice.

When I replied telling them they were in violation of the lease agreement and they'd accrue daily late fees they stood adamant in not paying rent. Moreover, they rescinded their offer to let me show the place.

I'm wondering what my next best moves are. I'm writing my attorney right now, but do I have any additional actions?

Billy Daniel · Answer

Don't allow the security deposit to take the place of rent. For starters, I'm pretty sure it cant legally. If they aren't paying rent, just proceed like you would any other month they wouldn't pay. You might remind them that an eviction will be on their record and show up in future rental application screenings...

Mackaylee Beach · Answer

I would not apply security deposit towards rent. I would wait to complete the move out inspection - and use deposit for any tenant caused damages.

Bruce Woodruff · Answer

Sue them in Small Claims Court and get a judgement. Have it recorded. It will follow them for long time.

Theresa Harris · Answer

Take them to small claims court only if there are damages. If they move out on time (ie April 30) and leave the place in good condition, it isn't worth your time to go to court over the late fee. The deposit will cover the April rent.

Nathan Gesner · Answer

You were too nice.

1. I would have given them a specific move-date and written instructions on what that process looks like, including the need for them to pay rent and that their deposit would be returned according to the lease/law.

2. If they fail to stick to the agreement, all termination penalties and other remedies would be back in play.

3. April 1 they fail to pay rent, so I would start the eviction process and notify them that they've violated our agreement and termination fees are back in play.

If you aren't proactive and clear, you have to be reactive.

Mike Dymski · Answer

Follow the lease agreement, issue pay or quit notice, let them know that you will have to file an eviction (on their record), and have the security deposit function as a security deposit at move out. Can discuss this with them pleasantly but also follow the contract. Once a resident in a resident-friendly state stops paying rent, they have little incentive to start it again and you have no certainty that they will move out.

Mark Bohstedt · Answer

As a General Contractor my liability insurer would drop me like a hot potato if they found out I let subs smoke pot or drink on the job. I’m sure it happens but if I see it the sub is off the job permanently. Not to mention it’s never a good look for a client to walk the job and see beer bottles scattered around.
If my subs want a drink then they need to drive off my jobsite, the liability is too much for me to risk. But, if you didn’t catch them drinking then you have no way to prove it, I would give the contractor a time frame to cure the issues or you’ll hire someone else and deduct the cost from their amount owed.

Tim Herman · Answer

@Scott Krause If your rental is New York you can only collect a total late fee of $50 or 5% of total rent whatever is smaller. You might want to read the landlord tenant rules so you don't get in trouble if you take them to court. Judge might award the tenants triple damages for you violating the tenants rights.

Bud Gaffney · Answer

@Scott Krause let them pay it and leave. It could be a lot worse.

Scott K. · Answer

I did this, but my note was ignored and they chose to not pay rent on April 1. I do think they'll leave without damaging the property, but I can't imagine that the law would let something like this go unpunished. How else would these things get enforceable outside of recovering damages?

How to handle a tenant who is using their security deposit as a last month's rent

How to handle a tenant who is using their security deposit as a last month's rent

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