Returning a Deposit Early- Inherited Tenant- Thoughts

6 Replies

Hello All,

So we just closed on a rental house yesterday, and one of our new tenants would like to renew his lease, which is up at the end of March (over 6 months away).  He has lived there for 3.5 years, claims to pay on time every month (and has as far as we know) and claims to have done no damage to the apartment.  Our plan was to fix up the units as the leases end in order to a)not be slum lords and b) get a bit more in rent and c) pass the city's rental inspection which happens every 2 years and is already 9 months overdue.  This particular unit is pretty trashed- there are holes in the hollow core doors, baseboard radiators are beat up, counter tops are chipped, carpets are snagged and stained, screens are damaged or missing, and the entry way is in dire need of some love.  The tenant claims none of this was caused by him, but does not have a copy of the move in report and neither does the seller (I will ask again though).  Given the state of the rest of the apartments and statements from other tenants, the place probably was this bad when the guy moved in so I wouldn't be deducting any of the existing issues from his deposit.

He is stressed out about losing his home, but will likely not pass the screening/background check to stay.  He does not have much income, so scraping together enough for a deposit somewhere else is going to be tough, even in 6+ months.  We talked about the security deposit today, and I told him we like to return deposits within a week though we are allowed a month by law, and he asked that, given the circumstances, we return the deposit early to help him move along to a new place.  The lease says there is a $100 cleaning fee automatically deducted, which I told him we would return to him if he left the place clean.  Do you think it makes sense to do a walkthrough about a week before he moves out, and if all seems to be as expected, return the majority of the deposit early?  Maybe hold back the $100 cleaning fee and return that after he moves out if he leaves it in good shape?

I have offered to waive the background check fee (we have no record of a background check run by the previous landlord) but I am not sure he would pass- the income he rattled off wouldn't be 3x the monthly rent (even for his half) and he has a DUI from 14-15 years ago (not sure if this would show up in a criminal check or not).  If he did pass, most of the work needed could be done with him in place, though it makes things a lot more difficult since he is ALWAYS home, so this is not our ideal scenario.

Thoughts?  

Kelly

Ahhh... The joys of tenant relations. I often listen to the tenants worries and often feel bad for them and their struggles. I have often made exceptions to my standards and I have often been taken advantage of. I allowed my first tenant to be late on a payment after two months of renting without paying a late fee. They were late 6 out of the next 10 months. Upon signing of the new lease I enforced the late fee's.

Today, I sympathize and empathize with the tenants but I no longer make exceptions to my standards. I find that it is easier to explain the rules and enforce the rules if you make your tenants follow the rules. The tenants understand the rules and will follow them much closer.

Adam B.- thanks for the reminder- my husband had something similar to say as well.  I do feel for the guy, but it isn't my fault that the previous landlord got him into this situation- he didn't screen, he didn't care about income, and he didn't fix anything in the apartment.  So now we have 2 trashed apartments and tenants that can't afford to leave.  The other 2 are empty and we are fixing them up and expect them to rent quickly.

 It's my experience that tenants who need their deposit back to get a new place will usually not pay last month's rent, anyway, using those funds for their next deposit instead of paying their rent.  If he's still got 6 months on the lease and you're okay with that, then I'd just plan on giving him proper notice, usually 30 or 60 days as required, that you won't be renewing and then expect not to receive last month's rent and hold off on any renovations to that unit as long as possible.  

If, however, you want him out early for the renovations or inspection issue, cash for keys would be better than any partial return of deposit while he's still there.  I'd agree to give him his whole deposit back, no cleaning fees deducted, on the day he moves out, signs an early termination agreement, and you walk through the property and ensure no further damage was done.   

Originally posted by @Lynn M. :

 It's my experience that tenants who need their deposit back to get a new place will usually not pay last month's rent, anyway, using those funds for their next deposit instead of paying their rent.  If he's still got 6 months on the lease and you're okay with that, then I'd just plan on giving him proper notice, usually 30 or 60 days as required, that you won't be renewing and then expect not to receive last month's rent and hold off on any renovations to that unit as long as possible.  

If, however, you want him out early for the renovations or inspection issue, cash for keys would be better than any partial return of deposit while he's still there.  I'd agree to give him his whole deposit back, no cleaning fees deducted, on the day he moves out, signs an early termination agreement, and you walk through the property and ensure no further damage was done.   

One thing that might be on the side of letting him stay until the end of his lease would be the timing.  If he moves out in the late fall you end up with a vacancy that you trying to rent in the middle of winter.  In this scenario I would plan for missing a month of rent.

If you think he could find something cheaper and you could get a better tenant quickly, then offering "cash for keys" for early termination now might be the best option.  Whatever money in that scenario should go either to the new landlord(or movers etc.) or be paid to him after he is out.

Thank you,  that makes sense.  I hadn't thought of cash for keys in this scenario but it might be the best solution.  

His lease ends at the end of March, which is good timing for us- that will give us a little bit of time to fix up the place prior to renting it again and April is a good time to rent.  I don't really want him leaving much earlier than that since filling a vacancy in winter is kind of a pain.  The other tenant's lease is up in November, and with the work that needs to happen there we'll be looking for a new lease to start in December, which also might be tough.  I am used to showing an apartment to new tenants while it is still occupied and signing a new lease 2-3 months in advance, but given work that needs to be done and the attitude of the tenant I doubt that will be an option.  

I am pretty soft, but no, no, no. Nothing good can come of giving deposit money back early other than you feeling good.

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