Landlord Evicted Tenant. Can the Landlord hold the Deposit?
Question
I had a tenant evicted recently and the judgment was made for the outstanding rent plus expenses. I am still holding the tenant’s deposit. The tenant is demanding the deposit back. Can I hold back the deposit until the back rent is paid?
Answer
For most (perhaps all) states, unpaid rent and damages (not normal wear & tear), and costs of the eviction can be deducted from the security deposit. If the amount of the judgment is more than the deposit amount, you would then seek collection of the rest from the ex-tenant. If the amount of the judgment is less than the deposit amount, you would refund the difference to the ex-tenant.
Although not required in some states when a money judgment was obtained, you should, however, be sure to provide an accounting for any amount of the security deposit not returned to the ex-tenant and do so within the time allowed by your state’s law unless you are certain of your state’s law on the subject. Among the states, the time varies from 10 to 60 or more days. Some states require the tenant to provide a forwarding address and/or to formally request the accounting, but many do not. Some states have yet other variations. When not covered by state law and the tenant didn’t provide a forwarding address, mail it to the address the tenant had at your property. Accordingly, you need to check and follow the law of your state.
Failure to provide the accounting and the return of any balance of the deposit not consumed by unpaid rent, damages, and/or other expenses within the specified time can result in serious penalties in many states, some states potentially awarding the tenant damages of two or three times the amount of the deposit.
The fact that a landlord has a judgment of more than the amount of the deposit may not matter in in some jurisdictions when it comes to the penalty for failure to follow the deposit return/accounting law.