Keeping security deposit when tenant breaks a lease

7 Replies

I just had a tenant tell me today that they are breaking their 1 yr lease and will be out of the house this weekend.  I'm thankful that I won't have an eviction but was wondering if anyone out there keeps the security deposit if they break the lease or if this is even legal. It will most likely go until the first of next month until it will get rented out which is an entire month without rent.  Any thoughts? 

I've had it happen multiple times.  If a tenant wants to break their lease early I take their security deposit in full and I also try to get them to list it on craigslist and find a replacement for me.  They usually cooperate.  Of course I always meet the new tenant in person and do my typical background check etc.  But this saves me a lot of time communicating and showing the unit to prospective tenants.

My girlfriend (before I met her) had her security deposit revoked when she abruptly moved to a new apartment because a friend of hers needed a roommate.  So this happens all the time in PA.

Is it legal in your state?  That I can't answer, I would call an attorney to find out for sure.

Jeff A.

Many states only allow actual damages, additional costs like advertising and rents not paid until a new tenant is found, so if you found a new tenant who will move in next week using a free service like postlets, for example, and they left it in the same shape they received it minus normal wear and tear, then you could only charge for the actual days of unpaid rent until the new tenant moves in.  Several, like MD, will allow the tenant to sue for 3 x improperly withheld amounts + legal costs if you do not provide list of actual damages and refund, so just make sure you are well aware of your own state's laws.   

This is almost a jurisdiction specific question.  Hopefully someone from Janesville will see this and answer.   In a majority of cases (far from all though) from what I've read over the years on this site and another site, you will be able to charge (deduct from sec dep) the tenant for any damages and any rent not paid until the end of the lease or until you get it rented again.  Judges will expect you to try to lease it asap. Also you may have a very hard time collecting on any judgment against the tenant for any rent/damages beyond security dep, so it usually behooves you to get it back on the market quickly.

It's as @Brie Schmidt   stated.  They are responsible up to the point of a new lease.  Good luck getting more than the deposit.  I don't attempt to get more than the deposit, it's not worth the frustration.  A) even with a judgment your still not going to see another $.  B) the effort is better spent re-filling.

So, get it listed and get it filled.  Then you will know how much you can keep of the deposit for missed rent.  Hopefully you don't have damages as well.  You have 21 days to return a deposit(or at least an itemization of why your keeping it) after move-out, or when you learned they had vacated.

Janesville doesn't have any provisions that I'm aware of and follow state law.

Hi @Chris Heeren  I would ask, what does your lease state?  I've seen leases that state in the event of early termination a liquidated damages clause protects the landlord.  My personal opinion is that a security deposit is to be used for damages / cleanings that have to be corrected after the tenant moves out.  This is why some people collect first and last months rent along with a security deposit.  

You could negotiate this with the tenant, when doing this offer them being released from the lease as a concession but if you do this then you want to keep the security deposit.  See what they say.  Remember, its not worth going to court over, a lease, just like a mortgage is the product of negotiation between two people.

That being said always consult a lawyer in regards to legal advice.

I totally agree " effort is better spent re-filling "

Do not mention to tenants  plans until property back in your control.

( keep your options open )

Just my two cents

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here