I rented an apartment to a couple over 5 years ago. At that time, I collected a security deposit of $650. The lease was for 1 year. We have been operating under the month to month provision of the contract for the last 4 years.
Unfortunately, the couple separated a year ago and the divorce is imminent. The woman has been living at the apartment alone since then, paying the rent herself.
Yesterday, she informed me of their separation, although I had suspected it for a while. She asked if I would remove him from the contract since he no longer lived there or contributed to the rent payment and utilities. My question involves the security deposit. Although the man has made no claim to his share of the deposit, I assume that he still has some claim to half of it. At what point does he lose claim to it, if ever.
How do I handle rent refunds to roommates in general when one decides to leave? What should I put in the contract to handle one of the roommates leaving after the term of the lease has expired and the tenants are then month to month?
I am not an attorney, but will give you my opinion about the issue based on a lot of experience as a landlord and property manager as well as having some knowledge of various other legal issues.
First, my understanding is that your current lease is with both husband and wife. Absent a Court order, you cannot legally remove the husband from the lease without his written agreement. Doing so would put you in the position of breaking the lease as far as he is concerned, possibly reducing your chances of recovering future rents and damages owed under the lease, even potentially making you financially liable if one if the husband wishes to litigate.
Second, when there are marital problems and the potential for legal separation and/or divorce, a landlord can get into a major hassle by siding with one of the parties against the other.
Third, it is potentially to your disadvantage to remove the husband from liability on the lease unless you are certain that the wife is in fact capable of paying the rent herself. As a general rule the more individuals liable for the lease the better for the landlord. Accordingly, if a co-tenant departs during the term of a lease, there is seldom a reason why the landlord should release that person from responsibility during the remaining original lease term, under some circumstances even when another person replaces him/her as co-tenant.
In a case such as yours, you should consider refusing to allow removal of the husband from the lease during the remainder of the lease term. You should consider that many divorces result in the wife’s financial position becoming significantly
reduced. Although this is not as big an issue now that the lease is month-to-month, for lease terms that still have long times to go it is because it is more likely that she might not be able to pay the rent for the remaining year of the
lease than that both together would be able to pay it.
You should have no legal obligation to release one party from the lease even if there is a divorce. Both parties usually remain legally responsible for all joint liabilities following a divorce even though the Judge might assign liabilities
between the parties when dividing the community assets and liabilities. For example, if the Judge awards a particular jointly held Visa credit card to one of the parties, Visa can still collect from the other party if the first party
fails to pay and failure to maintain credit accounts by one party after a divorce will often damage the credit record of both parties if they were joint account holders. The same principles would usually apply to a lease or any
other contract executed by both.
If, however, you are willing to release the husband from the lease because (1) you are certain that she will have the ability to pay the rent no matter what happens regarding her action or (2) you wish to provide charity, then you could tell the wife that you cannot remove the husband from the lease without his written agreement.
If he consents to removal and you agree to do so, then you will need to think about documentation. Whether you have the wife execute a new lease or adequately amend the existing one is probably not significantly critical, though I would
usually much prefer the former over the latter. However, keep in mind that either way, you should (1) have the wife execute the required document(s) before accepting removal of the husband, (2) consider this an opportunity to make any
other changes to the lease that you might consider desirable, and (3) make sure the documentation makes it clear who is responsible for any damages to the premises as of the date of amendment or new lease – that is, any changes in
condition of the property from the move-in condition at original possession date until the time of modification. Related to those issues, if you haven’t recently done a comprehensive inspection of the unit, I suggest that an inspection prior to document execution be part of the deal and that any damages be paid for by one or both parties prior to execution of any documentation.
The security deposit issue should be dealt with in writing. As a general principle, whether co-tenants are spouses or unrelated parties, security deposits and rents should always be considered a single total amount rather allocated among co-tenants. The landlord should initially only accept one full security deposit (in cash or bank check) and the FULL rent each month (in cash or bank check for the initial first month’s rent) from one person. The residents can fight it out among themselves for the “privilege” of making the payments, but if anybody offers to pay their “his or her share” of the deposit or rent, the landlord should refuse to accept, referring them to the lease agreement which should have so stated.
Accepting multiple separate checks can result in additional problems if one or more, but not all checks bounce. Furthermore, such acceptance may also indicate waiver of the “joint and several” words of the lease mentioned above.
For a husband and wife, the security deposit must be considered to be jointly owned by the two of them even if both did not sign the lease agreement. Nothing should be refunded until all documentation has been executed by both spouses and the wife provides cash or certified funds to cover what is being refunded to the husband. It would be simpler for the two spouses to settle the security deposit issue between the two rather than receive funds from the wife and make a refund to the husband, with adequate documentation regarding that issue.
Finally, you should consider re-screening the wife as an individual, both as to employment, income, and credit. The fact that she has supposedly been paying the rent herself for a length of time may give you some degree of confidence, but you probably have no proof that she’s really making it on her own. Additionally, this provides you with recent additional information about her, some of which might be materially different from what it was 5 years ago and might be useful if she were to later become a problem.