Security Deposit Dispute: How Long To Hold Money in Escrow?
Member since 2023 · 16 posts · 1 vote
Security Deposit Dispute: How Long To Hold Money in Escrow?
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Property Manager · Baltimore, MD · Member since 2014 · 1k+ posts · 1k+ votes
2yWhat I don't understand is why the landlord is "making claims", that complicates the issue. Isn't it the PMs job to assess damage and stand behind their assessment?
Also how was the "claim" documented? Was there an itemization of costs? Was it delivered via certified mail (or whatever the requirement/standard is in your state)?
To answer your question, I would think that Yes, the PM can distribute the SD as they see appropriate. Depending on the jurisdiction they probably have a set amount of time to do this so they don't want it sitting in their escrow account beyond that.
17 Replies
- Property Manager · Baltimore, MD · Member since 2014 · 1k+ posts · 1k+ votes2y
What I don't understand is why the landlord is "making claims", that complicates the issue. Isn't it the PMs job to assess damage and stand behind their assessment?
Also how was the "claim" documented? Was there an itemization of costs? Was it delivered via certified mail (or whatever the requirement/standard is in your state)?
To answer your question, I would think that Yes, the PM can distribute the SD as they see appropriate. Depending on the jurisdiction they probably have a set amount of time to do this so they don't want it sitting in their escrow account beyond that.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
@Greg Smith
This sounds like the property manager is not involved and does not want to be held responsible. As mentioned by another poster, why are you a determining damages, but not the property manager. It’s typically their job to determine what these were.
Out of curiosity, can you provide us with the list and cost of the damages? How are these documented?
7e investments53 Reviews - 2yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
Check your state laws.
In Michigan, the landlord is supposed to file a small claims case if they want to keep the security deposit over tenant protests.
Logical Property Management4.9464 Reviews - Member since 2023 · 16 posts · 1 vote2y
Quote from @Joe Norman:
What I don't understand is why the landlord is "making claims", that complicates the issue. Isn't it the PMs job to assess damage and stand behind their assessment?
Also how was the "claim" documented? Was there an itemization of costs? Was it delivered via certified mail (or whatever the requirement/standard is in your state)?
To answer your question, I would think that Yes, the PM can distribute the SD as they see appropriate. Depending on the jurisdiction they probably have a set amount of time to do this so they don't want it sitting in their escrow account beyond that.
To answer your question, the property owner made claims against the security deposit for cleaning and damages upon the tenants moving out 4 months ago. Tenants were notified by certified mail and received an itemized list of the claims. Tenants responded (within the legal time frame) by certified mail that they were disputing the claims. Subsequently, tenants met with the property manager in an attempt to resolve the dispute, bringing their photos, move-in and move-out videos, etc, to support their position that the property owner's claims were greatly exaggerated. Property manager stated she will show evidence to the property owner to see if a settlement could be reached. Tenants later informed by the property manager that the property owner is standing firm in his claims and no further negotiation ensued.
Property owner is now stating that she will close the issue and issue payments from escrow (meaning payment to tenant for undisputed portion AND payment to the property owner in the amount of his claims).
Is this a proper procedure? Can the property manager award the claim money to the property owner in the midst of a dispute? Shouldn't that money continue to be held in escrow until a court decides the matter? - Member since 2023 · 16 posts · 1 vote2y
Quote from @Michael Smythe:
Check your state laws.
In Michigan, the landlord is supposed to file a small claims case if they want to keep the security deposit over tenant protests.
This case is in Florida and I've tried to research the statutes to no avail. Then again, I'm not of a legal mind and so it is all quite confusing. - Member since 2023 · 16 posts · 1 vote2y
Quote from @Chris Seveney:
@Greg Smith
This sounds like the property manager is not involved and does not want to be held responsible. As mentioned by another poster, why are you a determining damages, but not the property manager. It’s typically their job to determine what these were.
Out of curiosity, can you provide us with the list and cost of the damages? How are these documented?
The property owner is making claims totaling nearly $6000. The big ticket items are $3500 for paint and $1000 for carpeting. The property owner provided some photographs as evidence. However, the tenants produced a ton of photographs and video evidence in the form of moving-in walk-through as well as moving-out video, as well as email exchanges between the tenants and property manager alerting about the carpet issues and staining of the paint (the hurricane blew off the roof and fascia, which left the interior of the house exposed to water damage for weeks). There is a magic website on the internet called Google…
6. Returning a Tenant’s Deposit
In regards to security deposits, the Florida statute requires a landlord to return a tenant’s deposit within 15 days after they move out. In addition, the landlord must also include any interest accrued.
If there are any deductions, then the Florida landlord must notify the renter within 30 days of their intention. Failure to do this within 30 days, the landlord forfeits their right to make any deductions.
If the renter doesn’t object to the deductions, then the landlord has 30 days after the initial written notice to return a portion of the deposit to the renter.
However, if the tenant objects, then the landlord can move to a small claims court.
https://www.managecentralfloridaproperty.com/florida-securit....
That being said, as others have stated, I have zero clue a to why the owner is even involved. That’s my PM’s job to bring the property back to pre-rental condition and deduct expenses, returning the rest to the tenants within deadlines.
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Assuming weird Florida rules/laws and that the tenants and the property owner are going to be in small claims court then definitely the PM shouldn’t be holding any money. They should disburse it all. IMHO.- Member since 2023 · 16 posts · 1 vote2y
Quote from @Bill B.:
There is a magic website on the internet called Google…
6. Returning a Tenant’s Deposit
In regards to security deposits, the Florida statute requires a landlord to return a tenant’s deposit within 15 days after they move out. In addition, the landlord must also include any interest accrued.
If there are any deductions, then the Florida landlord must notify the renter within 30 days of their intention. Failure to do this within 30 days, the landlord forfeits their right to make any deductions.
If the renter doesn’t object to the deductions, then the landlord has 30 days after the initial written notice to return a portion of the deposit to the renter.
However, if the tenant objects, then the landlord can move to a small claims court.
https://www.managecentralfloridaproperty.com/florida-securit....
That being said, as others have stated, I have zero clue a to why the owner is even involved. That’s my PM’s job to bring the property back to pre-rental condition and deduct expenses, returning the rest to the tenants within deadlines.
.
Assuming weird Florida rules/laws and that the tenants and the property owner are going to be in small claims court then definitely the PM shouldn’t be holding any money. They should disburse it all. IMHO.
Thanks. Again, I am not in the business nor am I of a legal mind, and that is why I am asking these questions in this forum. Hoping to get answers from folks far more knowledgeable than I am.
It just seems to me that anything not in dispute should be released to the tenants. After all, it is their money.
It also seems to me that the portion of the security deposit that is in dispute should not be just turned over to the property manager simply because he made claims. Now I am admittedly biased in this case, but I know the situation and in my honest opinion the property owners' claims are greatly exaggerated and borderline outlandish.
It seems to me that security deposit money continues to be the tenants' money until a court of law decides the legitimacy of the property owners' claims. But I am not well-versed in what the law says. That's why I am here :) It shouldn’t matter who holds the money until the court case. But that court case should have been scheduled a couple months ago. The property owner will need to provide receipts of actual money spent on professional cleaning, they can’t charge to clean themselves. So they shouldn’t profit from making the claim, I don’t see the upside to them if their claim is made up.
I didn’t see a penalty for not refunding it all within the allotted time (Some states award 2-x3 to the tenant for not returning it quickly, never any bonus to owners.). I suggest you tell them to switch to a different PM in the future as this one seems to be subpar. Maybe reach out to another PM now and see what they would have done differently if anything.
Good luck.
- Member since 2023 · 16 posts · 1 vote2yThanks. I will tell you what one attorney told me. He said Florida is a very friendly state to landlords. In some states, if a tenant wins in court, they can be awarded 2-3 times the amount of the security deposit, and this potential risk keeps landlords on the up and up. However, in Florida, this is not the case. In court, the tenant is merely fighting to recover the amount of the security deposit. The only risk to the landlord is having to pay the tenant's court costs if he loses.
Quote from @Bill B.:
It shouldn’t matter who holds the money until the court case. But that court case should have been scheduled a couple months ago. The property owner will need to provide receipts of actual money spent on professional cleaning, they can’t charge to clean themselves. So they shouldn’t profit from making the claim, I don’t see the upside to them if their claim is made up.
I didn’t see a penalty for not refunding it all within the allotted time (Some states award 2-x3 to the tenant for not returning it quickly, never any bonus to owners.). I suggest you tell them to switch to a different PM in the future as this one seems to be subpar. Maybe reach out to another PM now and see what they would have done differently if anything.
Good luck.
The same can be said for the tenant. What is their risk for challenging it in court? Trying to win on a technicality, a lost receipt, or a failure to show by the landlord, especially if he’s from out of state. Is anyone going to fly to Florida to fight a claim? If it’s allowed, they probably can’t even hire someone to fight it without losing money. Even a local landlord may have to take a vacation day from their job, costing them more than the claim the tenant made up.
No matter who wins, the other party is going to feel cheated. Let us know when you know what happened.
Who cares who releases what money to whom. There is a disagreement between tenant and landlord. Neither side are budging. Resolution is to take the dispute to court. This is exactly what courts are for.
Tenant needs to get off their *** and file a suit. Regardless of where the money is being "held", the landlord will be responsible for paying it if they lose.
- Member since 2023 · 16 posts · 1 vote2y
Quote from @Bill B.:
The same can be said for the tenant. What is their risk for challenging it in court? Trying to win on a technicality, a lost receipt, or a failure to show by the landlord, especially if he’s from out of state. Is anyone going to fly to Florida to fight a claim? If it’s allowed, they probably can’t even hire someone to fight it without losing money. Even a local landlord may have to take a vacation day from their job, costing them more than the claim the tenant made up.
No matter who wins, the other party is going to feel cheated. Let us know when you know what happened.
For me personally, I have been both a tenant and a landlord (rented out my home for a few years while away tending to other business). I get it.
That's why it is probably best for both parties to try to resolve their differences out of court. However, it takes both parties to show the willingness to come to the negotiating table. In this particular case, the property owner has only sent word through the property management company that he is standing firm. Quote from @Bill B.:
It shouldn’t matter who holds the money until the court case. But that court case should have been scheduled a couple months ago. The property owner will need to provide receipts of actual money spent on professional cleaning, they can’t charge to clean themselves. So they shouldn’t profit from making the claim, I don’t see the upside to them if their claim is made up.
I didn’t see a penalty for not refunding it all within the allotted time (Some states award 2-x3 to the tenant for not returning it quickly, never any bonus to owners.). I suggest you tell them to switch to a different PM in the future as this one seems to be subpar. Maybe reach out to another PM now and see what they would have done differently if anything.
Good luck.
> The property owner will need to provide receipts of actual money spent on professional cleaning, they can’t charge to clean themselves.
this is definitely not the case in every state. In CA, the LL can charge market price for work performed by LL or their employees. It also makes sense because contractors in recent time are booking weeks out. If I needed to hire everything out to 3rd party then the vacancy would be extended and I would need to charge higher rent to compensate for increased vacancy duration. Also larger complexes have employee maintenance staff. It would make zero sense to have to hire outside contractors.- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
@Greg Smith
That is going to be a very tough cell especially if there were storm damage and there wasn’t 100% replacement after that damage. What does the property manager say? Also, how long was this tenant in the property there is this thing called wear and tear that you should be replacing carpet and painting units every few years. If this tenant was in there for more than two years should be the responsibility of the owner to go and repaint.
7e investments53 Reviews - 2yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
Quote from @Greg Smith:
Quote from @Michael Smythe:
Check your state laws.
In Michigan, the landlord is supposed to file a small claims case if they want to keep the security deposit over tenant protests.
This case is in Florida and I've tried to research the statutes to no avail. Then again, I'm not of a legal mind and so it is all quite confusing.Took me seconds to Google this...
http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Displ...Logical Property Management4.9464 Reviews - Member since 2023 · 16 posts · 1 vote2y
Quote from @Chris Seveney:
@Greg Smith
That is going to be a very tough cell especially if there were storm damage and there wasn’t 100% replacement after that damage. What does the property manager say? Also, how long was this tenant in the property there is this thing called wear and tear that you should be replacing carpet and painting units every few years. If this tenant was in there for more than two years should be the responsibility of the owner to go and repaint.
Tenant was in the home for 1 year. Storm happened in month 2 of the lease. The storm ripped the roof, soffits, and fascia off the side of the house where the carpet and paint damage occurred. Water streamed in through the light fixtures and vents during the storm and whenever it rained in the days and weeks to follow. Water seeped in through the ceiling. If it happened to rain while the tenants were not home, they returned to soggy carpeting in places. Tenant has photographs of water stains and places where the paint bubbled up. The roof remained exposed for 3 weeks after the storm when a tarp was eventually put in place. The soffits and fascia were repaired 5 weeks after the storm. A new roof was installed 9 weeks after the storm. The property owner had his insurance adjuster come through the interior of the home 3 weeks after the storm, and the tenants accompanied the adjuster and property owner pointing out the damage. The adjuster took several photographs.
Interestingly enough, while the roof was eventually repaired, nothing was ever done to the interior of the home in the months which followed, all the way through the end of the lease. The water stains remained in the walls and ceiling. The carpeting was never addressed. No mold inspection ever occurred.
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