Three roommates signed a lease together. Now one roommate is leaving and wants her security deposit back. The other two tenants have indicated they will stay in the property but will probably want to add a new roommate. Each of the original tenants paid one-third of the security deposit. Do I refund one-third of the security deposit? Or does the security deposit remain in place until the lease ends?
The answer primarily depends on what it says in the lease agreement that the three co-tenants signed. Adding or subtracting co-tenants is not an unusual event, so a lease agreement should always contain adequately detailed information regarding the shared deposits and rent – specifically what happens in the beginning, when co-tenants are added or subtracted, and when all co-tenants leave at the same time.
Although many states make co-tenants jointly and severally liable by statute, the lease agreement should also contain a “joint and several” clause so that each tenant understands his legal obligation for the lease in its entirety.
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 amount at the beginning of the lease term and one full rent payment each month. In general a landlord should not accept partial rent – i.e., each roommate paying his “share of the rent”. Accepting multiple separate payments can result in additional problems for accounting and collection purposes. Acceptance of partial rents may also indicate waiver of the “joint and several” language in the lease agreement.
Unless prohibited by law, the lease agreement should require written consent of the landlord to a tenant’s request to replace one co-tenant with a new co-tenant. The proposed replacement co-tenant should be required to submit a rental application, pay the standard application and screening fees, and consent to the landlord’s stated 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 liabilities 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 a person from responsibility during the remaining original lease term even when another person replaces him as co-tenant.
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. The landlord should return the security deposit only to the last person on the rental agreement to leave the apartment. Such issues should be included within the lease agreement.
For protection of new, departing, and remaining occupants, it is a good idea that a walk-through inspection is performed and a checklist is completed whenever any co-tenant is replaced. It is recommended that the landlord collect reimbursement for damages to that date so that the tenants remaining 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.
For most situations, a landlord should require that the remaining tenants provide the departing tenant with a refund, with the landlord 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(s) 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.
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.