Security Deposited Refund or Not

7 Replies

Garage tenant entered 6 month lease for May into November $850 a month. Lease agreement states security deposit would be used as an unpaid rent if there was early termination.
Tenant decides to end lease early making final payment August 1st and moving out the 3rd, I find a tenant September 1st but at a rent payment of $700 instead of $850  
Does this tenant have the ability to get his security deposit refunded if it took a month to find a new tenant after he had left? 

If they paid you for August and left during that month then you dont have any back rent. What you can argue is using the SD to make up the differential since you are low losing $150 monthly because of their early termination. Sept to November would be 3 months x 150 would be $450 - $850 so balance returned to them would be $400.00

Treat it like a balance sheet . . . they owe $850/month for 6-months.  Any portion of that unpaid is rent owed.  If they "decide to end lease early" then they are abandoning the property or failing to perform on the lease.  

These have two different actions associated with it.  If you are considering it tenant abandonment then you should make good efforts to re-lease the unit and the former tenant would be responsible for their own rent up to the point when the new tenant's lease starts.  That may not JUST be confined to the rental amount owed, but rather utilities, late fees, etc BUT that varies from state to state and you'll want to consult your state's Tenant Landlord Act and related laws.

Originally posted by @Hai Le :

Garage tenant entered 6 month lease for May into November $850 a month. Lease agreement states security deposit would be used as an unpaid rent if there was early termination.
Tenant decides to end lease early making final payment August 1st and moving out the 3rd, I find a tenant September 1st but at a rent payment of $700 instead of $850  
Does this tenant have the ability to get his security deposit refunded if it took a month to find a new tenant after he had left? 

 You generally only get to keep the deposit for actual damages. His lease was May, June, July, August, September, October (6 months). He paid through August so he owed September and October. You got it re-rented to someone that paid September 1st and (presumably) October 1st. That leaves your damages at $300 (850+850-700-700). He should get a refund of $550.

Just out of curiosity, why did you re-rent it for so much less money? If you didn't get it rented for $850 until October 1, your actual damages would have been $850. 

Don't really say if the tenant was current on rent.  Assuming they were paid up till Aug 31st that would leave Sept and October outstanding.  

What exactly does your lease and local laws allow?  Meaning, does your lease say you can keep SD until it is rented?  Does it say if it rents for less you can keep the difference through the term?  Does it say if it rents for more you send him the overage through the end of the term?

A lot of people are answering your question but you haven't provided enough info.  if your lease doesn't cover a rent shortage you can try and keep it and see what happens. Outside of the shortage of rent you didn't miss any months of rent to keep.  Old paid August, new paid September.  Where is the missing month?

Holding the old tenant responsible for you renting the home at 150 a month less seems a bit harsh when we all know you wouldn't give him the overage if you rented it for more.  

You have the ability to keep the difference in rent until the lease actually expires in November so $150x3= $450 

$850-$450= $400

$400 is what you need to return or are obligated to return to the tenant. 

Hope this insight helps

Was there any termination agreement made with the tenant? Assuming they paid August rent, it looks like you have no gap in rent. The only gap would be the rent difference for September and October. That is $150 per month, so $300 total. That is all I would charge him assuming no other damage or cleaning at the property. In some cases, I charge a releasing fee, but since he had only two months left, you would be releasing soon anyways. 

Also be aware you should never just "keep the deposit". Every state has laws that govern security deposit deductions and return. You often have between two weeks and a full month to either return the deposit or send a letter explaining deductions. Failure to do this in some cases can make a landlord liable for double deposit in damages.

The letter should itemize deductions:

$850 deposit

-$150 September Rent difference*

-$150 October Rent difference*

=$550 return

*Tenant lease break charge. Property was released at $700 per month, so tenant is responsible for $150 difference for two remaining lease months.

Even if your deductions add up to 100% or more of the deposit, you still need to send a letter itemizing deductions. 

You may also consider just refunding the full amount, depending on overall situation. Sometimes it is not worth keeping a small amount of money, especially if you didn't communicate the charge to him ahead of time.

Barring other language in the lease, you're generally allowed to be made whole. You suffered ($150 in reduced rent)(number of months left on the contract) and this is what you are allowed to retain. You would also be able to retain a pro-rated portion of costs associated with finding a new tenant. For example, you spent $100 in advertising the unit to get the first tenant. He only stayed 4 of 6 months Therefore, you'd be entitled to keep 2/6 of the $100 spent on advertising. 

What you should have in your leases is an early termination clause. I charge two months rent or remainder of rent to fulfill the contract, whichever is less. Therefore, it doesn't matter if I get it re-rented early. It is a fee for breaking the lease, not reimbursing me for losses.