SECURITY DEPOSIT ISSUES

Whose money is it anyway?:
Frequently owners forget that the Security Deposits are the tenants money until such time as it is determined that all or a portion of said funds can be used for damages, legal fees, outstanding miscellaneous charges etc. after a tenant has vacated. It is not the owners money and some, or all of it, may be given back to a tenant.

Occasionally there is a dispute over these funds. The Real Estate Board and Division require that even though we represent the owners first, there is a legal responsibility to be fair to all parties. Consequently, we do not just turn over Security Deposits to the owner because they demand them or feel they are entitled to them. An owner may not be aware that should the tenant prove in court that any or all of their deposit kept was unjustified, that the owner would be liable for up to three (3) times the amount unfairly withheld. That can get to be real expensive.

Management Agreement clause:
Our Management Agreement, in the case of a dispute, allows us to handle the problem as we see fit... " to collect security and cleaning deposits and deposit all money in BROKER'S Trust Account; to compromise and settle claims; to require releases from all parties in the event of a controversy before disbursing Trust funds; to do all those things BROKER deems necessary to the efficient management of the Property." Our objective is to get both the seller and the tenant to agree on the distribution of deposits.

Accounting and State Law:
We are given thirty (30) days from the date a tenant vacates to make an accounting for the Security Deposit. The courts rarely uphold "estimates" as valid amounts to deduct from deposits. The work must be completed, usually by someone other than the owner. Does this mean the owner can't do his own work. No. It means that if he does, he had better be 100% sure of his charges, and they better be well documented. An owner who is a doctor, lawyer, or dentist can not charge his professional hourly rate for cleaning the appliances and floors based on the fact that he would have been getting that in the office but had to be at the property instead. It doesn't work that way.