How to handle deposit when one tenant moves out and another in?

Question

Hi Bigger Pockets Community!

Have a question on how to handle a security deposit and new lease term for a rental. Last year, a boyfriend and girlfriend duo moved in.The girlfriend has graduated college and gotten a job so has moved out; the boyfriend would like to remain another year to finish school, and bring in a roommate. So it will be just the boyfriend and the roommate for the next lease term.

My question is: How do I handle the current deposit? Do I need to return it to both boyfriend and girlfriend and then receive ½ back from the boyfriend and collect ½ from the new roommate? Or can I just return ½ to girlfriend and collect ½ from the roommate, keeping the other ½ “on file” from the boyfriend?

If the boyfriend girlfriend were moving out and I was dealing with new tenants, I would make a claim for a couple hundred dollars out of their deposit (they didn’t put pads underneath their furniture as specified in lease, and the hardwood floors we refinished before their move in are scratched as a result; we laid a pallet of sod for them that was well established for a few months, but they didn’t water it when it needed it due to lack of rain, and “neglect of landscaping” in the lease as well), but I don’t want to make things awkward for this next term with the boyfriend by putting a claim in for this term.

We do joint leases, but might individual leases work better in this situation? What would be the process as far as claiming damages go when someone is already in place? And the “move in” process for the new roommate?

Thanks a lot for your assistance and insight!

Kim Meredith Hampton · Answer

@Misty Alderman I make the leaving roommate and tenant staying sign a roommate release form, that basically states that the leaving tenant is no longer responsible for anything and is aware that the security deposit stays with the unit, and she would need to look to the staying tenant for any monies reimbursed to them. Don't let them drag you into their mess

Jason Burr · Answer

Have a similar situation that I haven't dealt with before.  Thought about putting the question out on the forums but a quick search and I have my answer!  Gotta love Bigger Pockets!

Alex Deacon · Answer

@Misty Alderman Misty here is how we handle it with roommates. The rent and deposit we don't care where it comes from but collectively everyone is responsible for it. So if a roommate moves out the they need to work out reimbursing each other for rents owed, repairs or deposits. You don't want to be responsible and get involved with their affairs. For example if one moves out they are still responsible for the full term of the lease unless the lease has expired. Or if you have agreed to let them out of the lease.

I hope that makes sense. Good luck

Deanna McCormick · Answer

As long as any original tenant is still in apartment / house then the original security deposit remains on the apartment..

If you have interim damage that is noted, you bill who is living there at then,they pay for that separate and it's not deducted from sec dep. it's a seperate charge.

The incoming, exiting roommates figure out between themselves how to make up difference with what they pay or are to paid back between themselves.

Roommate on off lease form is best to use  and the sec dep is part of that form.

Brent Langlois · Answer

@Misty Alderman I'm following up to see how you ended up handling the security deposit. I'm in the exact same situation. I have three tenants. One is leaving at the end of the 1-year lease, and they're adding a new tenant in his place. My plan is to have all three tenants sign a new lease since I want to add some language to the old one. My research has led me to follow @Kim Meredith Hampton's advice, her posts have been very helpful in the past. I'm not aware of any major damages so I don't plan to make any claims at this point...and I definitely don't want to get in the middle of the who gets what game.

Would appreciate hearing how things went.

-Brent

Misty Alderman · Answer

Thank you, Alex, for your quick and informative response!

However, I guess I should have clarified better. The lease term is up, and a new one will begin with one original tenant and one new.

How would you handle the deposit, esp. if you intent to make a claim on it? Return full deposit to boyfriend and girlfriend less $200 for damages, then collect again from boyfriend and roommate (new joint tenants for new lease term), and hope things aren't awkward with boyfriend tenant that is staying on? Would I have to make a claim this year, since that is when the damages occurred?

Or could I document it now with them (have already pointed out to them so they are aware) and note that if not fixed would have to collect it out of their half next year? Thanks!

How to handle deposit when one tenant moves out and another in?

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