Withholding a tenants deposit due to mold?

[Abi Horton]

I just bought a property that had tenements that were older and lived in the house for about 10 years. It came out during the inspection that there was a sewer line blockage and the tenants confirmed there had been “back ups”.

When viewing the property I could visibly see there is mold underneath the linoleum all over the bathroom floor. Some parts black near the toilet. But it’s on a concrete slab so was told I could just change the floor and treat it and be good. 

When the tenants moved out they found a number of spots behind furniture that had quite a bit of mold. After getting it inspected there are 6 areas where the drywall will have to be ripped out and replaced including two walls in the bathroom and I’m looking at $5k+ in remediation. 

Can I withhold the tenants deposit for this for negligence if not telling the landlord there was back ups/toilet problems? 

[Steve K.]

Quote from @Abi Horton:

Quote from @Mike Dymski:

Quote from @Abi Horton:

Quote from @Mike Dymski:

Quote from @Abi Horton:

Quote from @Mike Dymski:

Mold - the sales price should have been adjusted or the items fixed prior to closing.

Appliances - walk the property shortly before closing and don't close if it's missing things or messed up.  Your purchase contract should say what is included/excluded...and so should the lease agreement. 

The house closed with the tenants in it, I served them notice the next day. So I wasn’t able to do a walkthrough until the tenants moved out which was a month later. 

The mold was discovered when the tenants moved out and moved their big pieces of furniture. 

It's common/normal to inspect a house with residents in it.

The mold was revealed during the inspection...it's pervasive on the bathroom floor, which means a lot of water and/or a long time period, and would normally lead to a much deeper investigation for damage in the rest of the house as water easily travels.

As I mentioned, I am learning a lot of lessons with this first purchase. But my question is, can a tenant be held responsible for the damage as they didn’t tell the landlord of the issue which has ended up being much more damaging and expensive than it could have been if they had let someone know. 

The mold should have been addressed with the PSA (so no)...and the appliances can be addressed based on the PSA and lease agreement (so possibly...I would think so).  I was just trying to answer your questions above and not addressing lessons to learn.

What does PSA stand for? 

 Purchase and Sale Agreement. Called various things around the country, it's the Contract to Buy and Sell where I'm at. This is the master document that determines the price and terms of the agreement as well as timeline, any contingencies, closing, EM, estoppels, appraisal, which appliances and fixtures will convey with the sale and which won't, rent proration, etc. etc. etc. 

Unfortunately, nobody can answer your specific question about whether the tenant can be held responsible for damage in this case definitively because the answer could come down to a judges future decision on the matter, after reviewing all the details of the transaction, the PSA/contract, the lease, and hearing both sides. Technically a tenant can be help responsible for not informing a landlord of water intrusion, but in this case you did have your inspection period during which you had the opportunity to uncover any issues, so that would have been the time to conduct your due diligence, and it sounds like they did let you know about the issue at that time. For these reasons, it may be unlikely that you'd be successful in putting this on the tenant. You could keep their security deposit and find out, but sometimes that isn't worth the effort and can even backfire.

Next time move the furniture/ inspect a little more carefully, and get estoppel agreements signed by the tenants that state which appliances, fixtures and furniture are theirs, verify the terms of the lease and any outside "handshake" agreements with the landlord, any issues with the property, etc. Good luck!