Property manager & security deposit

4 Replies

I'm hoping you can help me sort this out, as I have no idea where to go. 

I had a property manager that I loved, but she retired and sold her accounts to another person. The new person was a nightmare in many regards, so I fired her a month ago. I will eventually hire a new manager, but am taking care of things on my own for now. 

So - one of my tenants is moving out in a few days. I just now got the paperwork from the property manager, and she sent me a check for the security deposits for our other two houses, but not for the one that is being vacated now. That particular tenant was late with her rent nearly every month, but she never paid the late fees. 

Now, the property manager kept the entire security deposit to pay the late fees and didn't turn any of it over to me. Is that legit? Can she do that? I know the security deposit can be used to cover unpaid rent, but it seems really off for her to just keep the entire deposit to cover fees that she didn't collect over the past year. I wasn't aware the tenant was paying late every month until recently.


I wouldn’t allow her to keep the deposit over uncharged late fees. That should have been handled at the time they were late not when the manager wants to lay claim to the funds. Unless it’s specifically written I’d demand the security deposit back. 

That's my feeling. it seems to me that, rather than just putting down $50 or $75 on the account every month, she should have been hounding the tenant to try to get the late fee. She did nothing - but now she wants to keep the entire security deposit to cover it. 

But - how do I get it from her? I've now fired her and we're parting ways. I have no leverage over her at all. Suggestions?

Eeeee. Kind of a grey area here. You really need to go by the exact wording of the contract with the original PM unless you signed a new one when she sold. If the contract says the PM is allowed to do that and there is no provision on how the security deposit is recovered, you might be out of luck. In the future I would not allow deduction from a deposit until the tenant moves out. As far as the tenant goes just send them an itemization list of any damages with the balance they owe (if any). Explain that the security deposit was used to pay late fees and list the months and the amounts deducted (hopefully she sent you the records). 

Thanks. I'm dreading going over there on Friday when the tenant is moving out. I hope it's not bad. 

I have a feeling I'll just write off this PM and move on - not worth the effort to try and get anything from her. With any luck, there aren't many damages to the house...