Tenant wants deposit

Accountant · Dallas, OR · Member since 2020 · 4 posts · 4 votes

I recently purchased a new property. One of my tenants wants her $300 depot back, she had this lease agreement with the previous owner 25 years ago. He is in Thailand and she has no idea how to contact him. She also has no idea if she even has a copy of her lease agreement with him. I am letting her pay the same until the end of the years which is $450. She plans to move out at the end of the year but she mentioned she wants her deposit back. What do I do? I am new at this. Thank you!

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Nathan GesnerBusiness Member

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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

Exactly what she said. Tell her the deposit will be returned after she has vacated and returned the property clean. If she's been there that long, I wouldn't worry about repairs because it's obviously overdue for painting, possibly flooring and more. She's been there a long time and I assume she's been good or you wouldn't be keeping her. Be generous and give the money back.

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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
5y
You should have received the deposit when you bought the house, but I'm guessing you didn't put that in the contract. Tell her the deposit is returned after she moves out and you've inspected the place. Then do the inspection and assuming the place is clean and in good shape (keeping in mind she lived there for 25!! years), give her the $300. Make sure any utilities that could be tied to the house (eg water) are paid. Are you sure of the amount? She's been there for 25 years and doesn't have a copy of the lease.
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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
5y
Exactly what she said. Tell her the deposit will be returned after she has vacated and returned the property clean. If she's been there that long, I wouldn't worry about repairs because it's obviously overdue for painting, possibly flooring and more. She's been there a long time and I assume she's been good or you wouldn't be keeping her. Be generous and give the money back.
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Estefania Lozano
OP
Accountant · Dallas, OR · Member since 2020 · 4 posts · 4 votes
5y
The thing is, she’s a hoarder and the place is NOT clean. No one had done an inspection in 25 years. She has 4 cats and the place smells horrible. This is a safety hazard!
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Estefania Lozano
OP
Accountant · Dallas, OR · Member since 2020 · 4 posts · 4 votes
5y
The carpet hasn’t been vacuumed in years I’m assuming, she didn’t let anyone in her apartment for 25 years and now that there’s a new owner (me) she is having a hard time accepting that I am now the landlord and I want things clean and sanitary!
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Michael Noto
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
5y
Stick to what your state law outlines in regards to landlord/tenant laws and how they pertain to security deposits. Most states I know of give you 30 days from when they vacate to return their deposit minus deductions if any.

Sounds like it will not take long for you to come up with $300 worth of deductions based on the description you provided about her unit. Make sure you cover yourself you itemize all deductions and send it to her certified mail to her forwarding address.
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Billy Smith
Shawnee Mission, KS · Member since 2016 · 716 posts · 313 votes
5y
Make this as simple as possible on yourself and the tenant, take pictures/videos of all damages, hording. When they don’t get the deposit back show up with copies pictures/videos of all the damage.

One-bit advice do not tell them they are not getting the deposit back until the move out, tell them they most clean the place up to get deposit back. If they think no deposit back LOOK out, they may hammer your tons of garbage more damage.
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Alejandro Espinosa
Contractor · NJ · Member since 2018 · 8 posts · 2 votes
5y
@Estefania Lozano Hi, by reading throught the comments and looking at the situation, and keep in mind this is my point of view, you need to have her go, give her the 300 back, it is nothing compared to the headaches and bills that will pile up such as, pest control, turn over on the adjacent properties, legal fees, evictions, I can go on. The sooner she leaves the sooner you can renovate the unit and rent it at a market rate. Those 300 should be looked at as an investment to get your unit back. Think on what you really want to do. Good luck
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Joe SplitrockPro Member
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Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
@Estefania Lozano the old owner is legally required to transfer any security deposits to the new owner. The lease agreements also transfer to the new owner, meaning you are responsible for all those tenants security deposits, whether you received them from the old owner or not.
It is fair to assume that a security deposit 25 years ago was around $300, so odds are good she is telling the truth.
You are responsible to return the security deposit if the property is left clean, damage free and she leaves without unpaid rents. The standard of condition is also governed by "normal wear and tear". After 25 years, the flooring, paint, appliances and even plumbing fixtures likely all need replacing. Especially if nothing was maintained along the way, which I doubt it was if the owner was charging her $450 a month.
The problem is you don't know the condition when she moved in and have no way to prove what it was like 25 years ago because you didn't even own it. If she leaves garbage or leaves it dirty, you can reasonably charge some deductions, but overall condition is tough.
The bigger issue is getting a hoarder to move after 25 years. IF she does move out at the end of the year, consider yourself lucky. I would use the $300 as leverage and just tell her as long as she takes all her belongings, cleans and is out by December 31st, that you will give her the money. Even if her cleaning job isn't great, it really doesn't matter because odds are good this is total rehab project anyways.
Don't give her a reason to not leave over $300. I always tell tenants my goal is to return 100% of their deposit. They get a cleaning checklist and understand damage will be charged. In other words, push responsibility for deposit to the tenant. Yes they can get it all back, if they don't it is because of them not you.
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Jennifer T.Pro Member
Investor · New Orleans, LA · Member since 2014 · 1k+ posts · 944 votes
5y
Originally posted by @Joe Splitrock:
@Estefania Lozano the old owner is legally required to transfer any security deposits to the new owner. The lease agreements also transfer to the new owner, meaning you are responsible for all those tenants security deposits, whether you received them from the old owner or not.
It is fair to assume that a security deposit 25 years ago was around $300, so odds are good she is telling the truth.
You are responsible to return the security deposit if the property is left clean, damage free and she leaves without unpaid rents. The standard of condition is also governed by "normal wear and tear". After 25 years, the flooring, paint, appliances and even plumbing fixtures likely all need replacing. Especially if nothing was maintained along the way, which I doubt it was if the owner was charging her $450 a month.
The problem is you don't know the condition when she moved in and have no way to prove what it was like 25 years ago because you didn't even own it. If she leaves garbage or leaves it dirty, you can reasonably charge some deductions, but overall condition is tough.
The bigger issue is getting a hoarder to move after 25 years. IF she does move out at the end of the year, consider yourself lucky. I would use the $300 as leverage and just tell her as long as she takes all her belongings, cleans and is out by December 31st, that you will give her the money. Even if her cleaning job isn't great, it really doesn't matter because odds are good this is total rehab project anyways.
Don't give her a reason to not leave over $300. I always tell tenants my goal is to return 100% of their deposit. They get a cleaning checklist and understand damage will be charged. In other words, push responsibility for deposit to the tenant. Yes they can get it all back, if they don't it is because of them not you.

Bingo! It can be a lot of work and time to clear out a house where previous tenants left a bunch of their junk. And I've never even had a hoarder tenant. Since she wants that $300 SD back, I would dangle that as a carrot to make sure she gets all of her stuff out of the house. In this specific situation and because of the low dollar amount, I wouldn't even make her wait for the SD. I would tell her that, as long as she isn't short on rent or caused any major/medium damage since I bought the house and removed all of her belongings (emphasis on removing all of her belongings), I will return her $300 SD within a couple days of her move out.
I would be thrilled to give a hoarder 300 bucks to get all their stuff out of a property. Unfortunately, I doubt you will be that lucky. But at least if you have set the parameters for what she needs to do to get the SD back, she won't be surprised if she doesn't get it back because she left a bunch of junk. Actually, she probably will be surprised. But you'll have a stronger leg to stand on.
You already knew the condition of the house when you bought it. You knew it reeked of cats. I'm sure there are all kinds of tenant-caused damages but, unless there is additional damage caused since you bought the home, it's not fair to hold her to any other damage because you have no idea what the conditions were when she moved in. Like a lot of other people mentioned, after 25 years, most/all the repairs needed are way past the "wear and tear" stage anyway.
For future deals, make sure security deposits and pro-rated rents are turned over to you at closing. Even better, get estoppel agreements signed by both the tenant and seller in regards to WHAT the SD and rent amounts are. If nothing else, $300 is a very cheap lesson to learn this.
For example, I bought two duplexes, 3 of the units occupied, last year. My title company...despite my reminding them multiple times "don't forget the pro-rated rents and security deposits" leading up to closing...forgot the pro-rated rents and SDs. They also didn't send me the HUD statement until 90 minutes before our closing. Fortunately I caught all the mistakes, despite being last minute!! But the SDs alone were $1500 of money I would have lost otherwise or would have lost if I didn't know to expect/ask for it. The pro-rated rents were another $1100.
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Mindy JensenPro Member
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
5y
All of this good advice aside, $300 is more to her than it is to you. It isn't anywhere near the cost to replace anything after 25 years of filth.
Tell her she has to remove all her stuff to get the deposit back in full, then give it to her when she complies.
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Adam Martin
Rental Property Investor · Member since 2020 · 1k+ posts · 1k+ votes
5y
In ky you have to have a movein checklist or you can't deduct from the deposit for damages and she could easily say it was like that when she moved in, prove it wasn't. I really wouldn't care about the $300 and that small amount seems reasonable. Pretty much everything in the house is past its useful life and you knew the condition of the house when you bought it. I would tell her as long as the house is left clean and empty on moveout you will have 3 hundred dollar bills to give her cash on moveout, this may motivate her to get her stuff out since it will cost you way more than that to do it yourself.
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James Ma
Burnaby, BC · Member since 2017 · 282 posts · 268 votes
5y
Did the previous landlord give you a copy of the movein inspection? I just sold a place and was surprised the new owner never reached out for that as now they cannot go after any damages as that could have already been the case when my tenants moved in.
Some great advice above already on dealing with the deposit and the tenant, I don't think I can add more except hopefully you have a copy of the inspection if you are seeking to hold back damage expenses from the deposit
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Jonathan R McLaughlin
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
5y
@Estefania Lozano so legalities aside this 300 is going to be a drop in the bucket of turnover. People with coping challenges can get fixated over random things so be flexible and avoid a battle that costs u money.. Budget the 300 as an expense, keep your eyes on the prize of an apartment in as good shape as u can get it with the minimum of fuss
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Brian LucierPro Member
Property Manager · Fitchburg, MA · Member since 2012 · 146 posts · 201 votes
5y
$300!!! Seriously???
Ok, so how many of you out there cannot afford to spring this much hosting a nice meal for your family. Lobster, steaks and a few bottles of wine for a table of 6. Bam!! $300 bucks spent in one hour.
This $300 means WAY more to the resident who most likely does not have the advantages or opportunities that real estate have been able to provide you and your family. If your risk tolerance as an investor cannot absorb $300 dollars as a cost of doing business, then maybe real estate is not the right answer for you.
Look at this as an opportunity to fix up the rental and make the place better, get higher rents, and a resident upgrade too. We never worry about vacancy because we look at this as an acceleration in raising the rents to market, or better.
What did the little birdie sing when she flew over the landlord's house?
Cheap, Cheap, Cheap!
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Max T.
Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
5y
@Estefania Lozano
So what is 300 gonna do for you if it’s already trashed? You have no documentation of condition from when she moved in 25 years ago. 300 is chump change. I would have it for her in cash as soon as her place is empty!
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Greg H.Pro Member
Moderator
Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
5y
Reality answer. Is it worth $300 to you for her to have her stuff out the the property as you no doubt counted on renovating the unit once vacated? Absolutely as it would cost you more to remove yourself. So kindly explain to her that when all rent is paid an the unit is empty and broom swept, you will do a walk through and refund her deposit
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Estefania Lozano
OP
Accountant · Dallas, OR · Member since 2020 · 4 posts · 4 votes
5y
Thank you guys so much!! I love all of these suggestions. I will definitely give her the deposit back if she leaves the apartment EMPTY. She has piles and piles of clothes, million of empty boxes. She is a complete hoarder. I just want her out, if this means this will motivate her to leave with all of her stuff I am most definitely willing to give her the deposit back.
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Mindy JensenPro Member
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
5y
Originally posted by @Account Closed:
It seems many of you are stuck on facts that are not facts. It's not a matter of, if she gives the tenant $300, her unit will magically be clean and perfect. In all likelihood, it's going to be trash either way. No, she shouldn't just outright blanket refuse to give it back before she moves, but, after she moves, if the tenant can't prove a deposit was made, or she didn't earn it by cleaning, what possible benefit could there be to giving this woman $300? You don't give back deposits until after a tenant is gone, and at this point, they no longer have any leverage if you decide not to give it back, so long as you are not legally required to.

It's not about the cost, it's about why would you just give somebody $300 for no reason? And it's not a cash for keys sort of deal anyway, sounds like she's leaving either way.

This is the type of attitude that gives landlords such a bad name.

She isn't paying off the tenant. She isn't doing a Cash for Keys scenario here. She is returning a very old security deposit in exchange for the tenant leaving the property empty. This tenant lived in this property for 25 years. $300 isn't going to go very far in the landlord's expenses, but can mean a lot to the vacating tenant.

It's also an incentive to remove all the stuff in the home.

You are correct that you don't give the deposit back until they have left, but if this tenant removes all items from the unit, she should absolutely be given her $300 back.

@Estefania Lozano, make sure to put in writing that you will return the entire security deposit of $300 when the property is returned to you completely empty, and keys in hand. Then keep your word - but have the tenant sign a receipt of funds.
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Mindy JensenPro Member
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
5y
Originally posted by @Account Closed:
Originally posted by @Mindy Jensen:

It's also an incentive to remove all the stuff in the home.

What deposit? Without documents the deposit doesn't exist. You're just guessing it was ever paid or that the amount is $300. Additionally, I did already explain that if she actually leaves the unit clean and habitable, she should be given the deposit back, but only after she can show the deposit was first given.

As for the "it's only $300" talk, who cares how much it is. Do you want to just give me $300 for no reason? Once she has cleaned her mess to whatever level she wants to and then leaves, she is gone. Giving her that deposit can not have any benefit for the landlord. It's not like she can go leave a Yelp review - good or bad, and I'm sure you don't want her recommending any replacements.

And who cares what the $300 means to the tenant. Once again you're guessing how much that is worth to her, but if she really wanted it, maybe she shouldn't have trashed the place huh? You're also wrongly assuming this woman is poor and the landlord is rich. To MANY landlords $300 is a LOT of money, and would go a long way towards getting this unit re-rented.

This is what gives landlord bad names - giving deposits back to people who do not deserve them, and paying people to leave. Both of those make you a slumlord, and only make things worse for the next landlord.

Also from what I can tell the OP doesn't want to give this money back unless the place is totally clean, which likely will not happen. The OP is totally correct and in the correct legal position.

Giving a deposit back to a tenant of 25 years doesn't give landlords a bad name and it certainly doesn't make you a slumlord. I never suggested she pay her to leave, I suggested returning the deposit the tenant is requesting.
Ultimately, real estate investing is a people business. We all have to own the fact that dealing with people requires a bit of empathy. And if you don’t believe that at face value, think of the value of retaining tenants to your bottom line at the very least. Joseph Asamoah speaks about the monetary value of being a good landlord here: https://www.biggerpockets.com/...
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Lynnette E.
Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
5y
Originally posted by @Account Closed:
It seems many of you are stuck on facts that are not facts. It's not a matter of, if she gives the tenant $300, her unit will magically be clean and perfect. In all likelihood, it's going to be trash either way. No, she shouldn't just outright blanket refuse to give it back before she moves, but, after she moves, if the tenant can't prove a deposit was made, or she didn't earn it by cleaning, what possible benefit could there be to giving this woman $300? You don't give back deposits until after a tenant is gone, and at this point, they no longer have any leverage if you decide not to give it back, so long as you are not legally required to.

It's not about the cost, it's about why would you just give somebody $300 for no reason? And it's not a cash for keys sort of deal anyway, sounds like she's leaving either way.

I'd give her the $300 even if she did not have the paperwork because it is likely that she did pay a deposit and after that period of time, the house will need a complete renovation anyway. Does it matter if the tub is scrubbed clean if I am just going to rip it out? Does it matter if the carpet is vacuumed and professionally cleaned if I am replacing it with vinyl?
If she leaves and takes the stuff she wants I'd be fine. With a rehab coming next, her pile of clothes or empty boxes won't impact my cost enough to worry about, so what maybe another dumpster?
And its lots less expensive to give her $300 than to spend my life trying to make her live at a different level of cleanliness than she has for decades, or to evict her for her uncleanliness.
Karma does eventually even things out and I do not want the reputation as THAT landlord who took advantage of a long term tenant.
Also, if you mess with that long term tenant the old landlord may be found and write something for court showing that she paid a $1000 deposit, you never know what will happen, but likely the old landlord was happy with her as a tenant and possibly friendly.
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