After reading an earlier column (March 7) about a tenant's right to a refund of his security deposit, several owners of rental property pointed out that they have legal problems too.
In looking at the law of security deposits from the landlord's perspective, the major complaint is that sneaky, unscrupulous tenants don't wait for their refund until they move out. Instead, they stop paying rent before the lease is up and tell the landlady or landlord to take the rent out of the security deposit, leaving nothing left to pay for broken windows or filthy kitchens.
One Palos Verdes landlady explained her common problem this way: "A year's lease was signed. A security deposit was paid. Now, the tenant is vacating and says he is leaving the country. He does not intend to pay any more rent, and he claims the security deposit will take care of the last month's rent!
"I will be left with no funds of his for any necessary fix-up when he does leave," she wrote. "So what good does it do to get contracts signed when a tenant can leave with a so-what attitude? I am bewildered."
Sue for Damages
If it's any solace, a tenant's refusal to pay the rent is what lawyers call "actionable." In simple English, that means you can sue him for damages or can begin eviction proceedings even if the security deposit is sufficient to cover the amount of rent due.
But there are no laws specifically designed to protect landlords in this situation.
"The statutes are designed to prevent chiseling by landlords in retaining the security deposit when they shouldn't, but there are no statutes against chiseling by tenants," according to Robert Ellickson, a Stanford law professor who teaches property law.
Ellickson suggests that the laws be made "symmetrical" with a penalty imposed on "tenants who wrongly withhold the last month's rent and damage the premises" just as there is a law imposing a penalty on landlords who keep security deposits in bad faith.
But that proposal doesn't solve the immediate problem. What can a reasonable landlord, who is willing to refund the deposit if the premises are left clean and undamaged, do? Here are some practical ways--and perhaps some not so practical--to combat the dishonest tenant.
Check out your tenants before you rent. Ask rental applicants to list their prior landlord's address and phone number, so you can check to see if they have cheated in the past.
Ask for a security deposit that is more than one month's rent. That will give you more than a month's notice if the tenant tries to force you to deduct the rent from the security deposit. And, Ellickson observes, it makes tenants "nervous if they have to stop paying rent two months ahead of time."
Reason with your tenant. Point out that he will legally be liable for the cost of any cleanup or damage and that you will sue him or take him to small claims court afterward. Include a provision in your standard lease that gives the prevailing party in any lawsuit the right to collect attorney's fees. The risk of having to pay for your lawyer may persuade the tenant to be reasonable.
If you can't work it out, send him a letter specifically spelling out his breach of the lease, and promise him that you will take him to small claims court for any damages--repair or cleanup needed--once the lease expires. And follow through on your promise.
Another, more costly, time-consuming possibility is to mount eviction proceedings against him. Just beginning the proceedings may do the trick. A tenant who receives a notice to quit the premises for failure to pay rent, or a summons, may decide to pay. But a street-smart tenant may think you're bluffing or know you may not get to court until he's long gone.
Ask the tenant to show his good faith by putting the rent into a trust account to be payable to you after the security deposit is returned. Of course, if there is a dispute about who caused what damage or what amount should be returned, the money may remain in the trust account until the squabbling is resolved, which could be quite some time.
Better yet, select a third party trusted by both landlord and tenant to hold the money in escrow, inspect the premises when the lease ends and allocate the deposit accordingly. The problem with this ideal solution is that the transaction costs of setting up such an arrangement could cost more than the security deposit itself.
Legal Right to Enter
Inspect the premises to see if there's been any damage so far. If the tenant won't let you in, you do have the legal right to enter the premises during business hours to make necessary or agreed-upon repairs or improvements or to show the unit to prospective tenants or purchasers. In general, you are required to give the tenant reasonable advance notice--the law says 24 hours is reasonable--of your intent to enter the premises, unless there is an emergency, in which case you can enter the premises without notice.