Security Deposit Dispute: How Long To Hold Money in Escrow?
Property manager is holding security deposit (several thousand dollars) in
escrow. Landlord makes claims against a large portion of security
deposit upon tenant moving out. Tenant disputes the claims. Property
manager continues to hold funds in escrow pending resolution, however,
no resolution is reached.
Tenant is in process of filing small claims case but hasn't yet. Meanwhile,
the property manager notifies tenant that they are going to close it out
and issue payments (meaning payment to the landlord for his claims and
payment to the tenant for the undisputed portion of the security
deposit).
Questions:
Can the property manager issue these payments from escrow if the
dispute has not been resolved? Or does the security deposit need to
continue to be held in escrow by the property manager? Is there a time
limit for the funds to be held in escrow by the property manager?
Most Popular Reply
What I don't understand is why the landlord is "making claims", that complicates the issue. Isn't it the PMs job to assess damage and stand behind their assessment?
Also how was the "claim" documented? Was there an itemization of costs? Was it delivered via certified mail (or whatever the requirement/standard is in your state)?
To answer your question, I would think that Yes, the PM can distribute the SD as they see appropriate. Depending on the jurisdiction they probably have a set amount of time to do this so they don't want it sitting in their escrow account beyond that.