Tenant wants security deposit to be applied to last month rent
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Real Estate Professional · Hayfork, CA · Member since 2015 · 231 posts · 212 votes
3yI would go ahead and have notice posted because you won't lose as much time if they do hold over. Even if they are planning to be out on time, tenants who force use of the deposit for last month's rent typically do not leave the rental empty or clean. They may even convince themselves that the junk they leave behind is worth something to you so they are doing you a favor.
14 Replies
- Real Estate Professional · Hayfork, CA · Member since 2015 · 231 posts · 212 votes3y
I would go ahead and have notice posted because you won't lose as much time if they do hold over. Even if they are planning to be out on time, tenants who force use of the deposit for last month's rent typically do not leave the rental empty or clean. They may even convince themselves that the junk they leave behind is worth something to you so they are doing you a favor.
- Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes3yAloha,
In part it is going to depend on local LL/Tenant laws. Does the LAW allow them to decide to apply it to last month rent? I doubt it. Therefore, follow the law and the written Rental Agreement with regard to posting notice for late payment; charging late fee; and taking any other allowed actions based on the actual timeline.
Inform the Tenant, in writing...not text, phone call, or email...in writing via Certified Mail, Return Receipt Requested that they are in violation of State Law and will be responsible for all costs and charges allowed by those laws. Then follow through with those lawful actions and notices. - Member since 2020 · 66 posts · 43 votes3y
I would go through the formality of posting a notice for non-payment. I would keep documentation of this. IF the tenant decides to pursue legal action, the court is going to require a track record of timely notices by the landlord. Thank you for sharing this experience with the BP community. Best of luck!
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
Quote from @Shiv B.:
Tell them the law and lease do not allow you to apply the deposit to rent. If they don't pay, they are in violation of the lease and will incur additional charges, not get a good Landlord reference, etc.
My process is like the others. I charge the late fee. I file a 3-day Pay or Quit and charge a fee for that. If they move out on time, I apply their deposit to rent and other unpaid charges, then I send them a bill for any unpaid amount.
If they don't move out on time, you're already on the way towards eviction and just continue that process.
The DIY Landlord Book4.7244 Reviews Thank you @Kathy Johnson, @Richard F., @Irving Casas, @Nathan Gesner for your very helpful responses and input.
@Kathy Johnson, @Richard F., @Irving Casas, @Nathan Gesner - just a quick follow up question to my original post. In your experience is it suggested to file second cause eviction along with first cause to cover any bills left unpaid by tenant? My rent on the property is just under 1K and I am reluctant to throw good money after bad in case the tenant doesn't leave me with too many bills to pay. Conversely would second cause costs be justified if there are unpaid bills and costs remaining but are hard/impossible to collect?. I will be using an attorney so costs will add up.I understand in Ohio first and second cause have to be filed together, so filing and attorney costs may outweigh the returns and I am trying to balance costs vs benefits. Would hold over count as an entirely separate filing category or will second cause cover this? Thank you.
- Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes3y
I agree with the above, and a note for next time....my deposit is never equal to the rent, it helps eliminate this issue right here. It may be higher, but is typically lower (I'm in a higher rent area). Since it is lower there's no ability to apply it to the rent without an additional payment, and since I use digital payment I don't initiate anything but a full payment.
- Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes3yI am not clear what you mean by "second cause", probably a difference in the legal process in your state. Nonetheless, we have typically had to file two separate cases, one for possession, the other for a money judgment. They were usually handled at the same time, just two different results. The first one would cause the Sheriff to physically set the Tenants and their property out, usually within about 10 days of the hearing, but in Tenant friendly states these can get postponed by the Tenants if they are creative. I had one fake a heart attack, EMS was called out and took the Tenant to hospital. Setout was postponed another 10 days, Tenant was back on property in about 4 hours. The money judgment becomes a separate "public record" that also hits their credit. Depending on the Tenant you MIGHT see a random check in the mail a few years down the road. Basically, if they are on the downhill side of life with lots of problems, no job, bad record with the law, etc. they are not likely to land a decent job and work their way out of the abyss. BUT, if they are just young and dumb, there is hope...hope that one day they will want to buy a home, or get a nice car, but that darned credit report is causing them problems. So, they make payment. You do have to renew those every 7, or maybe it is 10, years, and they will remain on the credit report until cleared. Just be sure you have an attorney or collection company that is monitoring it, and that they have your current contact info.
- Thank you for your input. Certainly a strategy to consider.
Quote from @Matt Devincenzo:
I agree with the above, and a note for next time....my deposit is never equal to the rent, it helps eliminate this issue right here. It may be higher, but is typically lower (I'm in a higher rent area). Since it is lower there's no ability to apply it to the rent without an additional payment, and since I use digital payment I don't initiate anything but a full payment.
Quote from @Richard F.:
I am not clear what you mean by "second cause", probably a difference in the legal process in your state. Nonetheless, we have typically had to file two separate cases, one for possession, the other for a money judgment. They were usually handled at the same time, just two different results. The first one would cause the Sheriff to physically set the Tenants and their property out, usually within about 10 days of the hearing, but in Tenant friendly states these can get postponed by the Tenants if they are creative. I had one fake a heart attack, EMS was called out and took the Tenant to hospital. Setout was postponed another 10 days, Tenant was back on property in about 4 hours. The money judgment becomes a separate "public record" that also hits their credit. Depending on the Tenant you MIGHT see a random check in the mail a few years down the road. Basically, if they are on the downhill side of life with lots of problems, no job, bad record with the law, etc. they are not likely to land a decent job and work their way out of the abyss. BUT, if they are just young and dumb, there is hope...hope that one day they will want to buy a home, or get a nice car, but that darned credit report is causing them problems. So, they make payment. You do have to renew those every 7, or maybe it is 10, years, and they will remain on the credit report until cleared. Just be sure you have an attorney or collection company that is monitoring it, and that they have your current contact info.Thank you for your detailed response @Richard F. Greatly appreciated. Yes you are correct that second cause is a money judgement. In my situation this is the last month of lease ending July 31. It is most unlikely that an eviction court date will come up until early August. If the tenant has already vacated by then, the eviction process will not move forward. Assuming they leave me with some costs large enough to justify a money judgement, can this process be pursued independent of the eviction process? Since my property is not high rental value, I need to consider whether the costs and hassles of the court process are justified vs just taking a hit on possible clean out/repair costs and moving on. Thank you.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
Quote from @Shiv B.:
I've never filed a second cause. I honestly didn't know it existed and really don't care. When I get to court, my #1 priority is to get the Tenant out and stop the bleeding.
You will get a judgment for what the Tenant owes up to that point. In my experience, the court gives me a judgment for unpaid rent and utilities, court filing fees, etc. They do not award me late fees or give me anything for future charges. If the court gives the Tenant 48 hours to vacate, I don't get awarded rent or utilities for those two additional days.
One other thing to note: the court always awards me what is owed without considering application of the deposit. If the Tenant owes $900 and has a $600 deposit, the court gives me the judgment for $900 so I have the deposit plus the judgment to cover costs.
It doesn't really matter. If the Tenant causes a bunch of damage on the way out and my costs go up, I can always go back to court for an additional judgment, but that's never happened.
The DIY Landlord Book4.7244 Reviews - Rental Property Investor · Laurel, MD · Member since 2016 · 383 posts · 382 votes3y
If you're going to be a long distant landlord, you need to get your house in order and fast! Today is the 12th of July and you posted this 3 days ago. You should have already sent notice of failure to pay on July 2nd. By the 5th or 6th (depending on local law) you should have filed in court for failure to pay rent. If the rental property is too far to deal with this yourself, either get a PM to manage it going forward or find a local attorney to process for you.
We have units that are almost 2 hrs drive from where we live. We can manage everything electronically for all notices. If we have to file with the court, we email our attorney all the supporting documents and they take over. Remember to always work smarter.
- 3yKonstantin GinzburgPro MemberMember since 2021 · 376 posts · 242 votes
As most others have stated on this forum, you should not allow a tenant to forcefully use the security deposit as last month's rent. I would proceed with a notice to vacate and begin official eviction proceedings. The security deposit is meant to pay for repairs and cleaning that may be needed to turnover the unit for the next tenant. If a tenant leaves a unit in great standing, then I typically return them the full amount but there is no guarantee of tenants doing so. There can often be damage that needs to be repaired or major cleaning that needs to be done. By accepting the security deposit as rent, you would be absolving the tenant of their financial duty to pay for any damage they may have done to the unit once they move out. Especially if your lease states so, I would move ahead with a notice. Since you are managing the rental from a distance, hopefully you have "boots on the ground" near your property that will be able to do the leg work for you, such as court filings.
Quote from @Shiv B.:
I've never filed a second cause. I honestly didn't know it existed and really don't care. When I get to court, my #1 priority is to get the Tenant out and stop the bleeding.
You will get a judgment for what the Tenant owes up to that point. In my experience, the court gives me a judgment for unpaid rent and utilities, court filing fees, etc. They do not award me late fees or give me anything for future charges. If the court gives the Tenant 48 hours to vacate, I don't get awarded rent or utilities for those two additional days.
One other thing to note: the court always awards me what is owed without considering application of the deposit. If the Tenant owes $900 and has a $600 deposit, the court gives me the judgment for $900 so I have the deposit plus the judgment to cover costs.
It doesn't really matter. If the Tenant causes a bunch of damage on the way out and my costs go up, I can always go back to court for an additional judgment, but that's never happened.
Thanks very much for the excellent advice!! Good to know a separate judgement for damage can be pursued if required.
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