Rental Property Investor · Delray Beach, FL · Member since 2014 · 224 posts · 169 votes
I evicted a tenant back in June through my property manager. The tenant was in default on 2.5 months of rent (about $1700 total), but also left the house with over $3000 in damages. The tenant had a $650 security deposit, which I had assumed would come back to me to cover some of the damages. However, my PM took their normal 10% fee and is claiming that the SD is being used to cover the unpaid rent instead.
Are they correct that the security deposit of the evicted tenant covers unpaid rent before incremental damage to the house? I'm not looking to cause a stir either way (I'm in over $6k on this eviction after the legal fees, so what's another $65 :P ), but I am curious if there is a legal order for how the deposit gets applied post-eviction?
Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
5y
We always apply security deposits to things that can't be challenged before things that can be. For example we would always apply it to back rent first before applying it dirty carpet. If they owe rent, utilities and for dirty carpet we will go in that order as well. This however is in our documentation as well. I am not aware there is a legal order, that said, I do believe that most managers would follow a similar path.
Nothing I saw in the management agreement or lease about the order in which the SD is applied in the event of eviction. Wasn't sure if maybe there was some sort of global rule about it instead.
Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
5y
We always apply security deposits to things that can't be challenged before things that can be. For example we would always apply it to back rent first before applying it dirty carpet. If they owe rent, utilities and for dirty carpet we will go in that order as well. This however is in our documentation as well. I am not aware there is a legal order, that said, I do believe that most managers would follow a similar path.
Rental Property Investor · Member since 2020 · 1k+ posts · 1k+ votes
5y
As an individual holding the deposit with no pm I would also say it was for rent first since that is easiest to deduct with not much of a defense from the tenant. The PM is out a lot of time and money most likely due to amount of time the eviction took especially in the current environment just as you are out money from the damages and lost rent. That said I think it is poor form to take the money being as they are the ones who selected the tenant that caused the problem in the first place. On the other hand they did successfully evict so maybe the 65 is worth it.
We always apply security deposits to things that can't be challenged before things that can be. For example we would always apply it to back rent first before applying it dirty carpet. If they owe rent, utilities and for dirty carpet we will go in that order as well. This however is in our documentation as well. I am not aware there is a legal order, that said, I do believe that most managers would follow a similar path.
That is a fair point. I guess I could also see the side that if the evicted tenant's debt is headed to collections, then the SD would probably be needed to be applied there first (at least for the tenant's sake in potentially paying it back). Like I said, I wasn't going to rock the boat over $65 regardless, but I am glad to hear that you could justify their perspective. Thanks.