Return of Partial Security Deposit When 1 Tenant Moves Out
Question
I have three unrelated tenants in one of my rental homes, all having signed the lease when they moved in at the same time following a vacancy. One tenant has left and the other two remain. The tenant who left is seeking her security deposit back. Who is responsible for paying back the deposit; the landlord or the tenants who have remained behind?
Answer
The answer primarily depends on what it says in the lease agreement that the three co-tenants signed and perhaps secondarily how issues regarding these tenants have been handled in the past. I am not aware of any state having a specific law regarding the issue. Adding or subtracting co-tenants is not an unusual event, so a lease agreement should always contain adequately explicit information regarding the shared deposits and rent – specifically what happens in the beginning, when co-tenants are added or subtracted, and when all co-tenant depart at the same time.
Since I have no idea what’s in your lease agreement or what your policies have previously been regarding co-tenant issues, I’ll start with a short discussion of a number of issues regarding co-tenants.
All occupants of legal age should be required to sign the lease. Although many states make co-tenants jointly and severally liable by statute, the lease agreement should still contain such a clause because the tenants then cannot get away with claiming to be unaware of their liabilities.
Security deposits and rents should each always be considered a single total amount rather allocated among co-tenants. The landlord should only accept one full security deposit (in cash or bank check) and the FULL rent each month (by 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,” but if anybody offers to pay their “his or her share” of the deposit or rent, the landlord should refuse to accept a partial rent amount, 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, are returned as NSF. Furthermore, such acceptance may also indicate waiver of the “joint and several” words of the lease mentioned above.
Unless prohibited by law, the lease agreement should require written consent of the landlord to a tenant’s request to sublet or assign the rental unit or to replace one co-tenant with another without written consent of the landlord. New co-tenants should be qualified to the same standard as those being replaced were unless the landlord is changing qualifying requirements for business reasons – e.g., a slow rental market requires lowering standards.
The agreement should include clauses regarding the security deposit and rent payment issues discussed.
If a co-tenant leaves and the residents find a replacement resident who is accepted by the landlord, then the landlord can agree to the replacement subject to the applicant meeting the landlord’s qualifying criteria.
The proposed replacement or additional co-tenant should be required to submit a rental application, pay any usual application and screening fees, and consent to the landlord’s standard tenant screening process.
Upon acceptance of the new co-tenant by the landlord, a new lease agreement or an amendment to the existing agreement should be executed by all occupants of the rental unit. This is important in order to make it clear that all remaining co-tenants were willing to accept joint and several liability regarding the new co-tenant.
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 even when another person replaces him as co-tenant.
In the case where a departing occupant will not be replaced, landlords may also want to consider financially re-qualifying the remaining occupants regarding their joint ability to pay the rent. However, one must be careful to consider familial status issues under fair housing laws.
Allocation of security deposit shares among old, new, and remaining co-tenants should usually be left as a matter between those parties. Absent some lease clause stating otherwise, the landlord is not legally required to release any of the security deposit until all lease terms are met and all the tenants have vacated the rental property. A replacement co-tenant usually should not pay a security deposit to the landlord. The landlord should personally return the security deposit only to the last person on the rental agreement to leave the apartment.
For protection of new, departing, and remaining occupants, it is a good idea that a walk-through inspection be performed and a checklist be completed whenever any co-tenant is replaced. It is recommended that the landlord collect reimbursement for damages to that date so that the continuing occupants can properly settle up with the departing co-tenant and start out with a clean slate and minimize damage claims later, a benefit to all parties.
Since I don’t know how your lease agreement deals with the above mentioned issues or whether it deals with any of them, it is difficult to provide specific advice regarding your present dilemma. Assuming that the agreement is significantly deficient regarding the mentioned recommended clauses, I think that your best option is to act as if the agreement DOES adequately deal with the issues or that the issues are covered under statutes or case law.
In other words, you require that the remaining tenants provide the departing tenant with a refund, with you creating documentation that memorializes that fact – perhaps even a new lease agreement for the period remaining of the original term. The walk-through inspection mentioned above should be performed to determine damages that have occurred to date so that the remaining tenant can collect (or deduct from the departing tenant’s refund) the departing tenant’s share, with the remaining tenants becoming liable for all damages evident at the end of the remaining tenants’ occupancy. If the departure date of the departing tenant does not coincide with the date rent is next due or if there is past due rent, this must be dealt with in a similar way as the security deposit.
If and when a new co-tenant is found by the remaining tenant and is accepted by you, similar procedures must be followed.
Additional discussions regarding co-tenant issues are found in our “9 Roommate Issues” Mini Training Guide.