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Renters: Protect Your Security Deposit

Just before ski season each year, a shuffle ensues. Most of us are familiar with this ritual. It generally consists of the frantic search for housing, schlepping one’s personal belongings around town, leaving old roommates, and learning the habits and moods of new ones. Frequently, the shuffle’s aftermath confronts residential landlords and tenants with the following security deposit issues.

How long can a landlord withhold a security deposit?
A landlord has until 30 days after expiration or termination of the lease to return a security deposit or provide a written accounting of any withholding, unless the lease provides for more time. In no case may a landlord hold a security deposit for more than 60 days without reason.

What must a landlord do to keep all or a portion of a security deposit?
If a landlord plans to keep all or a portion of a security deposit, he or she must give written notice to the tenant within the 30 to 60 day time period after lease termination. The landlord is only responsible for sending notice to a tenant’s last known address. Thus, former tenants should notify their former landlords of address changes. The notice must list the exact reasons for retaining any amount of the security deposit and must be accompanied with a refund of any amount of the deposit not being retained. If such notice is not given, the landlord forfeits any right to the security deposit.

For what kinds of damage can a landlord deduct from a security deposit?
A landlord may only withhold for nonpayment of rent, abandonment of the premises, nonpayment of utility charges, repair work or cleaning contracted for by the tenant, and damages exceeding normal wear and tear. What is “normal wear and tear” is not described in the Security Deposit Act and is one of the grayer areas of landlord tenant law. Generally, damage caused by a tenant to something which would not have otherwise deteriorated or would not have fallen into disrepair during the term of the lease, if the premises had been occupied by a reasonably prudent tenant and in compliance with the lease, exceeds normal wear and tear.

What can a tenant do if their landlord wrongfully withholds their security deposit?
Victims of wrongful withholdings may be vindicated in small claims court. Wrongful withholding of a security deposit occurs when a landlord retains a deposit in bad faith. Deliberate improper withholding is considered bad faith. A landlord who keeps all or a portion of a deposit in bad faith may be held liable for the tenant’s attorney’s fees, costs and “treble” damages (three times the amount of the security deposit wrongfully withheld). Prior to calculating treble damages, however, a court will generally offset the amount of damages to the premises caused by the tenant. In many cases, the cost (including time and effort) of recovering a wrongfully withheld security deposit exceeds the amount recovered.

What can be done to help prevent disputes over security deposits?
A lease should fairly and comprehensively address the expectations of the parties concerning the condition of the premises upon lease expiration and/or termination. Further prevention may take the form of a written inventory and photographic record of any defects or damages existing when the tenant moves in. The tenant and landlord should both sign off on such list.

As always, readers must understand that this column is not intended as advice. The purpose of this article is merely to explain general mechanics of the Security Deposit Act. Each lease situation presents a different set of facts to take under consideration.