Renter Broke Lease still wants deposit returned
Oak Ridge, NC · Member since 2016 · 7 posts · 1 vote
I say the best I can do is stop the rent clock as quickly as I can by re-renting it as soon as possible. If they know of a qualified applicant it would help.
Otherwise, I appreciate their work at move-out, bit tough sh*t. What they want isn't always what they get. They had a legal contract and obligation and broke it, leaving you in a big bind. Legally, you should be right to withhold until re-rented. Some would argue until the lease runs out, but I wouldn't hold to that. Good luck!
-Not legal advice, just what I'd do -
I say the best I can do is stop the rent clock as quickly as I can by re-renting it as soon as possible. If they know of a qualified applicant it would help.
Otherwise, I appreciate their work at move-out, bit tough sh*t. What they want isn't always what they get. They had a legal contract and obligation and broke it, leaving you in a big bind. Legally, you should be right to withhold until re-rented. Some would argue until the lease runs out, but I wouldn't hold to that. Good luck!
-Not legal advice, just what I'd do -
Every state's laws are different, but if they break their lease early you are entitled to keep their deposit until you get the place re-rented. If it takes you 4 months to get it rented, which I doubt it will, I would assume you can keep it all.
In NC, you have a duty to mitigate damages. What that means is that you can charge the tenant rent until you find a replacement tenant (using reasonable means to find an acceptable tenant without having to lower the rent). You can also charge them other fees associated with them breaking the lease such as any advertising fees.
http://www.nolo.com/legal-encyclopedia/tenants-rig...
So, unless there is any money left over from their deposit, after you charge them rent and advertising fees, until you have rent flowing again....nope, they don't get their deposit back.
Oh, and you also still get to charge them for any normal costs like cleaning, etc., that you'd be allowed to charge them under NC laws.
So, basically, they're dreaming :-)
Be sure and follow the laws regarding any move-out inspections, and the itemization of their deductions from their deposit, though.
And by the way, tenant who break their leases 4 months early, and then expect their full deposits back - are not good tenants.
Can't speak for NC but here in Ohio you can potentially charge the tenant to re-lease the property based on your ACTUAL LOSSES.
I had a similar situation a while ago where someone gave me a 3 day notice and left. I contacted my attorney and in our state we actually had some case law on this very thing so it was somewhat clear (And now , I have it VERY clear in my contracts). So, I charged $0 to re-rent the property but charged a daily fee based on nominal rental rates for as long as it was vacant. It ended up eating about half their deposit and they didn't complain a bit as I listed the case name from back in the 70s where a landlord won a significant sum against a tenant over the very thing.
"he believes he is entitled to his deposit. Is he right?"
Ever hear the old saying "people in hell want ice water too..but they don't get it?"
LEGALLY your tenant has a lease with you. It has a beginning date and an ending date. The tenant owes rent through the ENTIRE lease.
Your tenant is breaking his lease. However, he continues to owe rent until 1. a suitable replacement is found for him or 2. the lease would normally terminate.
It is unlikely that you will find a replacement tenant by September. Thus, his security deposit may be used for this months rent. I've attached the statute for your state that outlines what a tenants security deposit can be used for:
§ 42-51. Permitted uses of the deposit.
(a) Security deposits for residential dwelling units shall be permitted only for the following:
(1) The tenant's possible nonpayment of rent and costs for water or sewer services provided pursuant to G.S. 62-110(g) and electric service pursuant to G.S. 62-110(h).
(2) Damage to the premises, including damage to or destruction of smoke alarms or carbon monoxide alarms.
(3) Damages as the result of the nonfulfillment of the rental period, except where the tenant terminated the rental agreement under G.S. 42-45, G.S. 42-45.1, or because the tenant was forced to leave the property because of the landlord's violation of Article 2A of Chapter 42 of the General Statutes or was constructively evicted by the landlord's violation of G.S. 42-42(a).
(4) Any unpaid bills that become a lien against the demised property due to the tenant's occupancy.
(5) The costs of re-renting the premises after breach by the tenant, including any reasonable fees or commissions paid by the landlord to a licensed real estate broker to re-rent the premises.
(6) The costs of removal and storage of the tenant's property after a summary ejectment proceeding.
(7) Court costs.
(8) Any fee permitted by G.S. 42-46.
Keep in mind that you still have the obligation to notify your former tenant of the status of his security deposit within the required time frame for North Carolina.
Gail
In Texas, concerning a single family house. What if a tenant paid a 1 year lease in full, up front but then broke the lease by moving out 6 months later without giving the landlord any notice. Is the tenant entitled to the balance of funds remaining minus the months it took to re-lease the property?
I believe you are well within your rights to keep the deposit here as you have actual losses. However the real question is will the tenant sue you? Even if you win the case you lost the money paying for your defense. If you loose the case you will probably be sued for 2x or 3x rent, whatever amount your state allows.
It is all about scale. You may run into this situation 100 times during the course of your career. Let's say you win 85 of them. Keeping all 100 deposits and winning 85% of the cases will still put you way ahead of where you would be if you simply gave the deposit back to every tenant.
I agree with you 50%. You can't just give all SD because tenant will sue.
LL has follow the rules and keep what's allowed in the state's law.
What's the point of asking SD? If you give all the SD.
Thanks for your input. But it's not the just the security deposit that I am inquiring about, it's also the rent that was paid upfront. The tenant paid a full year of rent then left the property after 6 months into the lease without notice. Now, I have to repair damages, clean up the property, then find another tenant. I know that the security deposit would pay for that but say the cost is more than the security depost and it takes 3 months before I find a suitable tenant. In that case, I will use the prepaid rent to cover the monthly rent loss but once I have the property rented and say I have a balance of 3 months of rent left, does the remaining prepaid rent money go back to the tenant, if I find them? And If I don't find them, what must I do with the remaining money based on Texas law?
I'm from PA and I have been in this situation but it may not be extactly the same plus your ftom different state too.
Send me PM with phone and I can share my experince but you need to find out more about your situation in your state's law.
I agree with @Brandon Battle
"he believes he is entitled to his deposit. Is he right?"
Ever hear the old saying "people in hell want ice water too..but they don't get it?"
LEGALLY your tenant has a lease with you. It has a beginning date and an ending date. The tenant owes rent through the ENTIRE lease.
Your tenant is breaking his lease. However, he continues to owe rent until 1. a suitable replacement is found for him or 2. the lease would normally terminate.
It is unlikely that you will find a replacement tenant by September. Thus, his security deposit may be used for this months rent. I've attached the statute for your state that outlines what a tenants security deposit can be used for:
§ 42-51. Permitted uses of the deposit.
(a) Security deposits for residential dwelling units shall be permitted only for the following:
(1) The tenant's possible nonpayment of rent and costs for water or sewer services provided pursuant to G.S. 62-110(g) and electric service pursuant to G.S. 62-110(h).
(2) Damage to the premises, including damage to or destruction of smoke alarms or carbon monoxide alarms.
(3) Damages as the result of the nonfulfillment of the rental period, except where the tenant terminated the rental agreement under G.S. 42-45, G.S. 42-45.1, or because the tenant was forced to leave the property because of the landlord's violation of Article 2A of Chapter 42 of the General Statutes or was constructively evicted by the landlord's violation of G.S. 42-42(a).
(4) Any unpaid bills that become a lien against the demised property due to the tenant's occupancy.
(5) The costs of re-renting the premises after breach by the tenant, including any reasonable fees or commissions paid by the landlord to a licensed real estate broker to re-rent the premises.
(6) The costs of removal and storage of the tenant's property after a summary ejectment proceeding.
(7) Court costs.
(8) Any fee permitted by G.S. 42-46.
Keep in mind that you still have the obligation to notify your former tenant of the status of his security deposit within the required time frame for North Carolina.
Gail
Hi there
Anyone knows that my previous tenant moved out and didn't bother to give me their new address, do I legally have to give them the breakdowns for how I used the deposit? I have their email address. Thanks
Hi there
Anyone knows that my previous tenant moved out and didn't bother to give me their new address, do I legally have to give them the breakdowns for how I used the deposit? I have their email address. Thanks
Yes. You just send it with delivery confirmation to their last known address, which would be your property. I used USPS priority mail with delivery confirmation, because the mailman just scans it when they put it in the box. Nobody has to be present to sign for it. And you will have tracking proof you can get online. You just have to be able to prove that you sent it to their last known address on time. If it comes back to you, just keep it unopened.
But, if you don't do it, they usually have a year under the statute of limitations to sue you for not following the procedure correctly. It could bite you in the butt. And sometimes the laws say that if you don't follow the law to the letter, that you could owe the tenant not only their full deposit, but also two or three times the deposit in penalties.
Thanks for your input. But it's not the just the security deposit that I am inquiring about, it's also the rent that was paid upfront. The tenant paid a full year of rent then left the property after 6 months into the lease without notice. Now, I have to repair damages, clean up the property, then find another tenant. I know that the security deposit would pay for that but say the cost is more than the security depost and it takes 3 months before I find a suitable tenant. In that case, I will use the prepaid rent to cover the monthly rent loss but once I have the property rented and say I have a balance of 3 months of rent left, does the remaining prepaid rent money go back to the tenant, if I find them? And If I don't find them, what must I do with the remaining money based on Texas law?
If I recall correctly, in TX the lease rules. So, what does your lease say?
Otherwise, what you need to find out is if TX is a "duty to mitigate" state. So, Google "Texas landlord duty to mitigate" and see what the law is regarding duty to mitigate. What this means, is you can only charge the tenant rent until you find a new one. In that case, you'd have to refund the overpaid rent, after deducting legal costs (advertising fees, damage, etc.).
I like the Nolo books. They have one for TX:
Thanks Sue, yes, we have 30 days from the date the lease was broken to return the deposit minus any damages. We will do that according to Texas law. Additionally, once we have determined the date that the lease was broken, we will begin advertising to rent the property in order to mitigate further financial loss by the tenant. Once the property is rented, isince it was paid in full for 1 year, if there is any money remaining, that money will be given back to the tenant. Even though some people have made comments to keep the money, we will not do that because it would be a violation of Texas law. Our plan is to do what is right in accordance with our lease which is based on Texas law. Thanks for commenting on this post.
@Account Closed
Tracy- As I stated, Texas law only requires the deposit to be returned within 30 days of vacating AND being given a forwarding address. Meaning the clock on the 30 days does not begin until we receive in writing a forwarding address. There is no duty to send to the last known address. Mitigation is a requirement in Texas but is can only be described as making a reasonable effort
Sue- A quick search seems to indicate Utah law is similar to Texas in that the requirement is 30 days or 15 days after receiving a forwarding address whichever is later
Update, the tenants called us last night. They stated that they will be returning the keys, pool key and garage remote. Additionally, they gave us verbal notice but will put it in writing that they will be breaking the lease. We informed them that there deposit will not be returned until after the 30 days as indicated by Sue and Greg. They also understand that they will pay up to the time the property is re-rented. Thanks everyone for your input.
@ Sue K
@Greg
Thank you so much for the information ! You are all so great ! It's a blessing to be part of this investment community !
Thanks everyone for your input. I did speak to an attorney for advise at no charge. The attorney advised me to send a letter advising them that they broke the lease and we will even though the tenants called us to inform us that they will be breaking the lease. So at this point, the situation will be resolved once they hand over the keys.
Many lessons learned for me. Even though I have a good lease based off the Texas laws, some of the points that you guys have made will be incorporated into all of my leases and emphasized to the tenant during our in brief. I will also let my attorney review the document.
At this point, there are no issues although we still must meet with them. The house was clean when they left and all utilities were in their name. The entire issue circled around allowing the electricity, water to be cut off, grass not cut, and leaving the house without these services connected. Our lease states that the electricity, water, and lawn must be maintained. Until we lease the property, the money will come out of the money from the rent received for the year.
I don't know if anyone has ever heard of a series LLC, it is used when you have more than one property. It allows separation without forming an LLC for each property. Your comments are welcome.
Hello John, in our lease, if the tenant is moving out, we must inspect the property to see if the air conditioning works, if the light bulbs work, if the oven is working, dishwasher, etc. If they cut the electricity off before we do our inspection and I give them their full security deposit when they leave, there is no doubt that I will be out money.
I learned that before any tenant leaves, we conduct a joint inspection. The goal is that their will be no surprises when we do send their security deposit back. Even though we itemize the items that need to be replaced or repaired, we do the inspection together. Same as coming into the property, we do an inspection to verify that everything is working.
Regarding the LLC, I was once an insurance agent as well. I use to tell my clients that an umbrella will protect you, and it will but for liability issues slip and falls, etc. but not contractual issues regarding your business. Such as, you hire a contractor to do something and it causes injury or that you didn't do something in the contract that you missed. With an LLC, your risk is limited to the business LLC, although, anyone can sue you. However, by establishing an LLC, boundaries are placed on your assets with focus on the specific LLC in question whether the issues occurred.
An LLC protects the owner from liability caused by anyone participating in the business. Any liability damages awarded can only go after company assets, not your personal assets.
And your right, nothing will prevent anyone from suing you, whether you have an umbrella or an LLC but using them properly can limit your losses.