Renter moved in in February and there was a pipe to burst. Took a week to repair and I rebated the rent. A week later a sewage back up. This also took week to resolve. Renter wants deposit back and to move because house was'nt move in ready. I have a "no early temination" clause. Must give 60 days notice before move. Got an email on 5th requesting refund or court. Deposit was used on multiple repairs. What do I do?
You used their deposit to repair your building? You should not have done that.
The deposit should only be used for damages the tenant causes and only after they move out. It's up to you what you do, but when we've had disastrous move ins, we usually let them out as its just easier to fix all the problems right and release it to a tenant the isnt mad at you.
I wouldn't really do or say much until they actually move out. They wouldn't/couldn't get their deposit back until they're fully moved out anyway so after they move out then handle the deposits accordingly. If there is damage or a balance due then deduct it from the deposit.
I don't see them being able to do much as far as legal action if they're still living there but I wouldn't want anyone staying in my property that doesn't want to be there.
I'm not sure if you're a new landlord, so you may not have known what a security deposit was, just that you had to collect it.
Security deposit = money held by landlord to be used AFTER the tenant moves out to repair anything caused by the tenants outside normal wear and tear. Any remainder is given back to the tenant within the time allowed by the state.
Was the house actually move in ready? Was the pipe bursting issue something you could have anticipated or not anticipated? Was it caused by the tenant or not?
What about the sewage backup? I just had an issue with a sewage backup in the basement at one of my properties and it was caused by tree roots. I got someone out there right away to fix it (within one day). I'm not sure how that could have taken a week to resolve but we probably don't know the whole story.
Did you give a week's rent credit for the sewage issue as well? Are there any other issues that would prevent the tenants from living in the property?
Taking a week to resolve these issues is too long. I'm not surprised your tenants are unhappy.
That said, problems do happen and they often cannot be resolved immediately. If that's what happening, its not a reason for them to break the lease.
OTOH, if the property truly was not ready for someone to move in, then let them go.
You should not have used the tenants deposit for ANYTHING. Period. I keep deposits in a separate account and never, ever touch that money until the tenant leaves. If I withhold some of the money, I then take it out of their deposit and send them a check for the rest.
If they were the cause of the problem (e.g., hanging objects from a water line or flushing diapers down the sewer) you should bill them for the repairs. If not, these are entirely your problem to fix. But in neither case can you use the tenants deposit.
If they have left, do the normal accounting for their moveout. Even without a "lease breaking fee" you can typically charge them for rent until you can re-rent the place. That assumes its ready to rent or the only repairs are for problems they caused. If the place is not really ready to rent, then you're pushing your luck if you try to deduct rent. Send them an accounting with the amounts they're being charged and a check for any remaining deposit.
In many states, if you fail to do the accounting within the allotted time, the tenant can assume there are no charges. Many states allow double or triple damages if landlords inappropriately withhold deposits.
Jon Holdman, Flying Phoenix LLC
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