Tenant filing suit for security deposit from a year ago :/

Jeffrey McKee · 2021-05-23T18:37:41-07:00

Hi All, I have a tenant who has come back to me requesting her 400 dollars of the 1200 dollar security deposit. She was 1/4 roomates and did pay 400 of the 1200 deposite. They all vacated the property early due to covid and I allowed it, but did not charge them to break the lease. I was able to fill the vacancy without any vacancy loss. I am learning the hard way that I needed to provide an itemized statement of what I was to keep from the deposit and that it needed to be done within 30 days of vacating. I am well past the thirty days and she is threatening to file suit. I plan to just give her back her 400 dollars to stop her from filing. What document can I have her sign to ensure she does not ever try to sue me again. I had the property professionally cleaned for 414 dollars and have an invoice and told her she was only due back a percentage of the deposit. She suggests that was not the case and is due back the full amount she contributed because I failed to give her an itemized statement. The law seems to be on her side. P.S. The tenant is now in law school and feeling very empowered :)

Cameron TopePro Member

Property Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes

5y

Hey Jeffrey,

If you have an invoice for the $414 then you have your itemized charges.

I wouldn't be intimidated by her tactics, especially if you're just charging them fairly - which it sounds like you are.

This won't be the first time a tenant will throw the attorney card. When a tenant tells us they would like to get attorney's involved, we always tell them "then we have to stop this conversation and pass you along to our attorney". That usually stops their bluff.

To reiterate, don't be intimidated by tenants if you have the evidence of damage and are charging them fairly. It's just part of being a landlord.

Best of luck!

[email protected]832-770-7090

15 Reply

Greg H.Pro Member

Moderator

Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes

5y

So in Texas, the law for returning a deposit reads:

You must return or account for the deposit within 30 days of the property being vacate AND a forwarding address being given. When were you given a forwarding address as the clock does not begin until that time?

1 Reply

Eric James

Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes

5y

Originally posted by @Greg H.:

So in Texas, the law for returning a deposit reads:

You must return or account for the deposit within 30 days of the property being vacate AND a forwarding address being given. When were you given a forwarding address as the clock does not begin until that time?

That's what I was thinking as well. If the former tenant provided a forwarding address.

3 Reply

Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

5y

If the deposit was $1200 and there were 4 of them, why does she get $400 and not $300?

8 Reply

Dan Schwartz

Real Estate Investor · Tempe, AZ · Member since 2012 · 874 posts · 648 votes

5y

@Jeffrey McKee did the property warrant cleaning beyond “normal wear and tear”? If not, does your lease (or state refs) allow you to withhold the cost of post-move out cleaning? Did you do a post-move out walk-through?

1 Reply

Greg H.Pro Member

Moderator

Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes

5y

@Dan Schwartz

Based on Texas law that is irrelevant at this point. If more than 30 days has passed since the property was vacated AND he was given a forwarding address, he can be liable for 3x the deposit if he did not return or account for it

2 Reply

Dan Schwartz

Real Estate Investor · Tempe, AZ · Member since 2012 · 874 posts · 648 votes

5y

@Greg H. oh, for sure. To be clearer, I’m also questioning the ability to charge for routine cleaning, even when the normal timelines are adhered to.

1 Reply

Bruce Lynn

Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes

5y

Did she leave a forwarding address? Not an email, not a text message, but physical forwarding address? If not, then you may still have the right to deductions.

As a landlord I would suggest you read the Texas Property Code regarding landlord/tenant laws. It's actually fairly easy to read. Probably a good thing to read 2-3 times a year.

https://statutes.capitol.texas...

Read

Sec. 92.103 for Security Deposit Refunds

1 Reply

Chris Purcell

Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes

5y

@Jeffrey McKee

Well if she deserved it back, just pay her and move on. You didn’t have vacancy, what am I missing here

2 Reply

Kim Meredith HamptonBusiness Member

Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes

5y

@Jeffrey McKee unfortunately you made a mistake for not appropriately making claim per the Texas property code. Give her back the $400 and move on. You don’t want the cost of court on such a small amount. You live and learn and now know what you should do within the thirty days of the tenant vacating

[email protected]407-448-6679 Podcast Guest on Show The Key to Scoring Discounted Deals in One of America’s Hottest Markets

Compass | St. Pete514 Reviews

Website View Page

3 Reply

Greg H.Pro Member

Moderator

Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes

5y

@Kim Meredith Hampton

At this point we have no idea as to whether he has handled it appropriately or not. Texas Law requires the deposit to be returned or accounted for within 30 days AND being given a forwarding address. Jeffrey has not stated as to whether he was given a forwarding address

@Jeffrey McKee Additionally, were they all on separate leases of one lease? If they were all on one lease, any deposit/accounting should be returned by check to all of them. It is not your responsibility to return deposits separately unless spelled out in the lease to do so

0 Reply

Kim Meredith HamptonBusiness Member

Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes

5y

Originally posted by @Greg H.:

@Kim Meredith Hampton

At this point we have no idea as to whether he has handled it appropriately or not. Texas Law requires the deposit to be returned or accounted for within 30 days AND being given a forwarding address. Jeffrey has not stated as to whether he was given a forwarding address

This is what he stated;

I am learning the hard way that I needed to provide an itemized statement of what I was to keep from the deposit and that it needed to be done within 30 days of vacating

@Jeffrey McKee Additionally, were they all on separate leases of one lease? If they were all on one lease, any deposit/accounting should be returned by check to all of them. It is not your responsibility to return deposits separately unless spelled out in the lease to do so

[email protected]407-448-6679 Podcast Guest on Show The Key to Scoring Discounted Deals in One of America’s Hottest Markets

Compass | St. Pete514 Reviews

Website View Page

0 Reply

Joe SplitrockPro Member

Moderator

Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes

5y

@Jeffrey McKee the facts seem to be:

- You collected a $1200 deposit from 4 roommates

- You agreed to let them break the lease and agreed not to charge them

- You experienced to no vacancy loss

- You never sent an itemized list of deductions or returned the deposit

- The only costs you mention are $414 for carpet cleaning

To summarize, $1400 minus $414 is $986 that should be returned. She is asking for $400 and you are trying to argue she is only due back a portion of her money? My advice is that you should return the entire $400 deposit. Generally speaking, after 30 days the courts don't care what deductions you are entitled to. In court you may end up being forced to return the entire $1200 deposit plus damages. When you fail to send the money back or a letter explaining deductions, you give up your rights to the money. It is is unclear why you even kept the money in the first place. If keeping the deposit was a condition of the lease break, you should have put that in writing. It is reasonable to charge a lease break fee of 1-2 months rent, but it needs to be agreed to at the time.

3 Reply

Greg H.Pro Member

Moderator

Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes

5y

@Joe Splitrock

In Texas, the 30 day clock does not begin until the lease it terminated, property has been vacated AND the landlord has been delivered a forwarding address.

I would also not return a portion of the deposit to just one person but to the group as a whole unless it was clearly stated in the lease to do so

0 Reply

Linda S.

Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes

5y

@Jeffrey McKee,

Reading your post, reminds me of a tenant we just got rid of-- I call them "Laura Lawyers" because they think they are much smarter, and will read the fine print to their advantage and disregard all the good things you did-- ie: not charging to break a lease. You can be nice to them, waive late fees, work out payment plans to avoid evictions, etc... but when it boils down to money, it's jeckle and hyde and they will be after your throat, so trust me-- I understand!

That being said, cleaning is a normal part of vacancy, IMO you can't charge tenants for having to clean-- that's called turnover and is normal and expected. The right thing to do is to give her and all the other tenants their full 1200 back. You got it filled quickly, which is great-- the money was never yours. If it was 4 people-- I'd think it'd be $300. If it goes to court, you're spending more money/time/stress, it's not needed-- do the right thing and refund her the $$ ASAP IMO.

Nip this one in the butt and give her the money back, just be happy they moved out on their own and you didn't have to deal with a formal eviction!

3 Reply

Tracy Minick

Rental Property Investor · Monroe, WA · Member since 2018 · 177 posts · 98 votes

5y

This is always one of the toughest lessons to learn and I am sure you will not forget it. I suggest providing all the tenants with the invoice for accounting and advise that the $400 was used to clean per the lease. See if that helps. She may not proceed with "court" or a lawyer. If she does then settle.

1 Reply

Account Closed

Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes

5y

So you kept a deposit of $1200 for a year with no accounting or receipt and no real legit damages? What stopped you from returning the money earlier? Did you just think they were unaware kids and would never follow through? What happened to the other $800? Are you going to return that to the other tenants? Maybe Im misreading things but if what I think is true happened, you are the reason people hate landlords so much.

Legally (and ethically) you have to return the money. Not just for fear of being sued but because its the right thing to do. All $1200 of it, not just the $400. If it was lease breakage fee, it should have been agreed to in writing. Which it obviously was not.

1 Reply

Joe SplitrockPro Member

Moderator

Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes

5y

Originally posted by @Greg H.:

@Joe Splitrock

In Texas, the 30 day clock does not begin until the lease it terminated, property has been vacated AND the landlord has been delivered a forwarding address.

I would also not return a portion of the deposit to just one person but to the group as a whole unless it was clearly stated in the lease to do so

I guess it depends on if he had their address or even tried to get it. It sounds like he didn't even know what he was supposed to do. I state conditions of security deposit return in my lease, which includes providing an address. Even if I don't get their address, I would mail to last known address. It may get forwarded or returned. If it is returned, it can be kept as proof that you attempted delivery.

Even if he is off the hook for not getting the address, the clock starts when he does get the address. That means he needs to return something now (money and/or an explanation of deductions). I agree with you, it should be returned to everyone. I would send one check with all their names on it. Of course it depends on how the lease is written. If the tenants were treated separately versus as one, then he probably needs to send separate returns.

Either way, this wasn't handled properly a year ago. I would never leave it hanging and just hope they don't come asking for their money. I would have charged them a lease break fee so they would have owed me money...

1 Reply

Greg H.Pro Member

Moderator

Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes

5y

@Joe Splitrock

I think we all would agree including him that it could have been handled better

The possible saving grace is that it is the tenant's responsibility to provide the forwarding address and not the landlords to even ask or send to the last known address. The law actually stills requires it in writing although I would assume most JP Court judges has relaxed that provision to include email and text

1 Reply

Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

5y

Originally posted by @Linda S.:

@Jeffrey McKee,

Reading your post, reminds me of a tenant we just got rid of-- I call them "Laura Lawyers" because they think they are much smarter, and will read the fine print to their advantage and disregard all the good things you did-- ie: not charging to break a lease. You can be nice to them, waive late fees, work out payment plans to avoid evictions, etc... but when it boils down to money, it's jeckle and hyde and they will be after your throat, so trust me-- I understand!

That being said, cleaning is a normal part of vacancy, IMO you can't charge tenants for having to clean-- that's called turnover and is normal and expected. The right thing to do is to give her and all the other tenants their full 1200 back. You got it filled quickly, which is great-- the money was never yours. If it was 4 people-- I'd think it'd be $300. If it goes to court, you're spending more money/time/stress, it's not needed-- do the right thing and refund her the $$ ASAP IMO.

Nip this one in the butt and give her the money back, just be happy they moved out on their own and you didn't have to deal with a formal eviction!

>cleaning is a normal part of vacancy

In tenant friendly CA, cleaning is not considered normal wear and tear and can be charged for. The normal wear and tear is not as well defined in the regulations as it probably should be, but the general consensus is the landlord can deduct for costs related to cleaning the unit and restoring it to a move-in ready condition. In other words, the tenant is responsible for cleaning the place such that a cleaner is not required and if they do not they can be charged for the cleaning.

Our policy is the longer a tenant is in the unit, the more "cleaning" we are willing to take on without charging the tenant. If they are in the unit a year (we virtually never have a tenant as short as a year), we expect them to move out with the unit as clean as when they moved it otherwise they will be charged for the cleaning.

I do not know Texas rules related to cleaning but suspect that the tenant could legally be charged for the cleaning if all other parts of the law were followed. It is unclear as to why the LL kept the deposit, but if it was because he did not have a forwarding address I suspect he can still charge for the cleaning. If he had a forwarding address, he should pay the full deposit back (in full, the full $1200 returned as specified in the lease (hopefully lease specifies the returning of the deposit)) as the appearance is that he was hoping he could keep the deposit that he was not entitled to. It does not matter if this was the reason or not. What matters is any judge/arbitrator will likely believe that was the reason and may award damages.

0 Reply

Jonathan R McLaughlin

Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes

5y

@Jeffrey McKee law students are harder than lawyers—most lawyers realize getting to court is a losing game :)

One thing that should help guide you going forward. Treat the security deposit as THEIR money, which it is. The safeguards and limits exists because it is THEIR money you have in your custody. You aren’t entitled to it unless it is under very specific circumstances which are outlined in each states books.

Thinking like this can guide you in your “hold em or fold em” decision

0 Reply

Jerel Ehlert

Attorney · Austin, TX · Member since 2014 · 888 posts · 759 votes

5y

This is absolutely one area that will get landlords into trouble. Glad to see mostly good posts, but here's some points to ponder.

Only deductions from T's security deposit permitted is damage beyond wear and tear. Cleaning deposits, even when by contract, are probably voidable under the plain statutory language. It doesn't matter what your "policy" is. Rent is to cover make ready, too.

In the day and age when (almost) everyone has an email address, getting a forwarding address to start the clock will be going away. All you need to do an accounting is an email account. To send money for free, all you need is an email account a la, venmo, or even just a phone that gets text messages (SMS). Failure to have a forwarding address is no longer a barrier to comply with the statute. Get a few more cases like this, Texas House and Senate can write that into the property code and win voters very easily.

Roommates is probably the stickier issue. If you were to lease to roommates, a roommate agreement is good to have in place. If payment is made to one, is it good as against all? If one says she deposited $400/$1200 that's not an even split. Does the one who shorted have a claim for an even return?

Sure, law students can easily get full of themselves, but most of the problem I hear is from LLs being held accountable to the strict, black letter law. Probably no worse than renting to RE agents.

1 Reply

Brian Ploszay

Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes

5y

Sorry. There are rules for taking security deposits and you didn't comply. You may expect the others to do the same now.

0 Reply

Eric James

Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes

5y

Originally posted by @Jerel Ehlert:

This is absolutely one area that will get landlords into trouble. Glad to see mostly good posts, but here's some points to ponder.

Only deductions from T's security deposit permitted is damage beyond wear and tear. Cleaning deposits, even when by contract, are probably voidable under the plain statutory language. It doesn't matter what your "policy" is. Rent is to cover make ready, too.

In the day and age when (almost) everyone has an email address, getting a forwarding address to start the clock will be going away. All you need to do an accounting is an email account. To send money for free, all you need is an email account a la, venmo, or even just a phone that gets text messages (SMS). Failure to have a forwarding address is no longer a barrier to comply with the statute. Get a few more cases like this, Texas House and Senate can write that into the property code and win voters very easily.

Roommates is probably the stickier issue. If you were to lease to roommates, a roommate agreement is good to have in place. If payment is made to one, is it good as against all? If one says she deposited $400/$1200 that's not an even split. Does the one who shorted have a claim for an even return?

Sure, law students can easily get full of themselves, but most of the problem I hear is from LLs being held accountable to the strict, black letter law. Probably no worse than renting to RE agents.

A good lease states whether security deposit is to be returned as a check to one tenant, or sent individually to each tenant.

This case is also a lesson in sticking by policies and not doing tenants "favors" like allowing them to break leases without consequence. That will come back to bite you, as in this case.

0 Reply

Greg H.Pro Member

Moderator

Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes

5y

@Jerel Ehlert

While I agree with you most of the time, whether the requirement to give a forwarding address may go away at some point has no relevance here. Additionally, with the legislative session ending in a couple of days, unless something happens quickly in may be 2023 at the earliest. Yes can’t imagine the legislature will force a landlord at any point to send blindly to an email

1 Reply

Tenant filing suit for security deposit from a year ago :/

Tenant filing suit for security deposit from a year ago :/

Most Popular Reply

28 Replies