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 A landlord shared with us a story about his recent court case for unpaid rent and damages against his tenant who ran out early. Among other things, this tenant chiseled his initials into the stone fireplace.
The landlord owned only the one property and he cared for it with great pride. So, he felt motivated to pursue this tenant, and with some diligence, was able to locate him. The landlord then hired a lawyer, paid a retainer and a court filing fee, and asked for a judgment for his losses.  The tenant contested the lawsuit, so the matter had to be scheduled for a short trial.After hearing the evidence, and seeing the meticulous records from the landlord detailing the rent schedule and damages, the judge ruled in his favor and awarded him a judgment against the tenant. So what’s the problem?
“I’m sorry,” the judge explained. “I’d like to award you attorneys fees in this matter, but your lease doesn’t provide for it.”
That simple omission cost roughly $900.
In the landlord’s defense, attorneys fees provisions are not “standard” in any lease. Because the award of attorneys fees is regulated on the state level, what you can ask for — and what you might get, varies. For that reason, some “standard” lease forms leave it out altogether.
Even if you have a “standard” attorneys fees provision, it may not be enforceable in your state. However, it is certainly not uncommon for the landlord and tenant to agree in the lease that the prevailing party in any lawsuit between them will be entitled to reimbursement of their attorneys fees.
So talk to your lawyer, and find out what your attorneys fees provision should state.
And while you are at it, ask your attorney about adding interest onto your claim for unpaid rent. You just may be entitled to that little bit of extra compensation as well.
See our series, How to Create a Solid Lease Agreement.
American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa.
To subscribe to our blog, click here.
by Janet Portman, Inman News
He wants to install a ramp to his apartment (there’s a set of steps to the front door). I have a vacant unit that has no steps, which would solve the problem.
Can I insist that he move to the other unit, which is identical except in this one respect?
Can I require that he remove the ramp when he leaves?
And, he’ll be out of that wheelchair in a matter of a couple of months — is he even disabled? –Tom S.
A: Your last question is where we should start: Does a temporary condition qualify as a disability? This question has been answered in the employment context, at least. According to the technical assistance manual prepared by the Equal Employment Opportunity Commission (the rules for employers and landlords are often identical), you’d have to look “at the extent, duration and impact of the impairment. Temporary, non-chronic impairments that do not last for a long time and that have little or no long-term impact usually are not disabilities.
For example: Broken limbs, sprains, concussions, appendicitis, common colds or influenza generally would not be disabilities. A broken leg that heals normally within a few months, for example, would not be a disability. However, if a broken leg took significantly longer than the normal healing period to heal, and during this period the individual could not walk, he or she would be considered to have a disability. Or if the leg did not heal properly and resulted in a permanent impairment that significantly restricted walking or other major life activities, he or she would be considered to have a disability. (See: The Americans With Disabilities Act Title I Technical Assistance Manual, Section 2.2(a)(iii).) Let’s apply that rule to you and your tenant. You’ve said that he’ll be out of his wheelchair within a few months, implying that he is healing normally. If that’s so, his broken leg does not meet the definition of a disability, and you are not required to allow him to install that ramp, nor are you required to offer another rental. But if his healing takes longer, he may have a disability. If that happens, read on. A tenant who uses a wheelchair and asks to install a ramp to the front door has made a reasonable request, which you may not refuse unless it poses an undue burden on your business or property. For example, it’s easy to install a ramp when you’re dealing with two steps in a wide walkway; but if the “set of steps” consisted of several steep flights, a ramp probably would not be a reasonable solution. Nor can you insist instead that he move to an accessible unit. As to removing the ramp when he leaves, under the Fair Housing Act, housing providers may require tenants to restore modifications at the end of their tenancy only when they’ve been made to the interior of the dwelling. (And even then, it’s unreasonable to demand restoration when the modification would not lower the value of the rental or pose a problem for succeeding tenants.) Reasonable modifications like ramps to the front door or modifications made to laundry rooms or building entrances need not be restored. Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of “Every Landlord’s Legal Guide” and “Every Tenant’s Legal Guide.” She can be reached at janet@inman.com. See Janet Portman’s feature, How to Negotiate a Lease Buyout. American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa.
To subscribe to our blog, click here. It’s now official. The Great Recession is over. That, according to a large majority of leading economists.
 What has the experts gazing cautiously up at the sky without bracing for falling debris?
The Commerce Department’s Bureau of Economic Analysis released data Thursday on GDP in the third quarter – and it was good news. According to the report, real GDP increased 3.5 percent at an annual rate in the third quarter, after declining in five of the preceding six quarters. The gain marked the largest quarterly advance since the third quarter of 2007. U.S. Commerce Secretary Gary Locke issued the following statement in response to the news:
“Today’s numbers indicate that the tough decisions this administration made to rescue the economy from the abyss were correct. We’re headed in the right direction, and even though there are still too many Americans out of work and still much work to be done, without the action taken in the early days of this administration, the pain families are feeling today would be much worse.”
While most economists agree that the recession has halted, they are also cautious about sustained recovery.
In fact, in a survey by the National Association for Business Economics, the vast majority of business economists believe that the recession has ended but that the economic recovery is likely to be more moderate than those typically experienced following steep declines.
“The NABE panel upgraded the economic outlook for the next several quarters, compared with the previous survey,” according to NABE President-elect Lynn Reaser, chief economist at Point Loma Nazarene University.
“Following a sharp 6.4 percent (annual rate) contraction in the first quarter of this year and another 0.7 percent drop in the second quarter, NABE forecasters expect real GDP to rise at an above trend 2.9 percent rate in the second half. The more-than-three-year downturn in the housing market is very close to coming to an end, with substantial growth (from a low base) expected for next year.”
According to the survey, the key areas of concern involve the large increases in federal debt and unemployment rates that are expected to remain very high through next year. The unemployment rate is forecast to rise to 10 percent in the first quarter of next year and edge down to 9.5 percent by the end of 2010.
That’s bad news for landlords. We have already seen how the high unemployment figures have driven up vacancy rates. With fewer qualified applicants, properties may sit vacant for a longer time, or landlords may have no choice but to lower rent or offer other incentives to keep properties filled. Congress is acting to extend unemployment benefits once again, which at least provides existing tenants who lose a job some income source for rent payments. All the while housing numbers are improving, recent reports show that the vast number of home sales is in the lower end of the market, to those using the first time buyer credits – previous renters who can now afford a home of their own. Yet, according to NABE, inflation is expected to remain contained throughout 2010. “The good news is that this deep and long recession appears to be over, and with improving credit markets, the U.S. economy can return to solid growth next year without worry about rising inflation.” See our feature, Bad News For The Rental Market.
American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa.
To subscribe to our blog, click here.
November 13, 2009
TWO SEPARATE AUCTION SITES: AUCTIONS in MONT ALTO, PA 17237 @ 10AM 3 DUPLEXES: EACH duplex has 3 bedrooms, 1 bath, kitchen, living room, dining room & all are within walking distance to Penn State Mont Alto Campus NEW TOWNHOUSE DUPLEX To be offered: Offered separately & as a whole. Custom-built townhomes each w/ 3 BR, 1.5 bath, living room, kitchen/dining room, laundry room, oversized 1-car garage. 3 APPROVED DUPLEX LOTS To be offered: READY to BUILD all wtih PUBLIC UTILITIES. 3 SINGLE FAMILY LOTS with CREEK FRONTAGE To be offered: READY to BUILD all with PUBLIC UTILITIES. Lots range from 0.9+-to 1.1+-acres. AUCTIONS in SHIPPENSBURG, PA 17257 @ 1PM ABSOLUTE AUCTION - 6+-ACRE APARTMENT COMPLEX Bordering SHIPPENSBURG UNIVERSITY on 3 SIDES: Sunbeam Court/Rocky Knob Apartments. Successful HIGH-RETURN investment property with 7 APARTMENT BUILDINGS with (27) 2 & 3 bedroom apartment units, and also APPROVED LOTS for 9 additional buildings consisting of 40 more apartment units-utilities & infra-structure already in place.
ABSOLOUTE AUCTION – 4-UNIT APRTMENT BUILDING: (1) 2BR & (2) 3BR apartments. 2 RESIDENTIAL DEVELOPMENTS close to I-81 To be offered Forrest Ridge Acres Development 22 APPROVED SINGLE FAMILY LOTS: PUBLIC UTILITIES & additional 60+-ACRES with preliminary drawings for additional 120+LOTS. Between Rt.11 & Possum Hollow Rd.
Apple Hill Development 64 PRELIMINARY LOTS: Additional 24+-ACRES with preliminary drawings. Off of Lindsay Lot Rd. For more information contact: Hurley Auctions: 866-424-3337 info@hurleyauctions.com or follow the link below: http://www.hurleyauctions.com/absoluteig/gallery.asp?categoryid=835
Q: I’m interested in a rental that describes the rent in an odd way: First, the advertisement lists the rent, then it adds “pet rent.” Is this legal? –Rigoberto R.  A: It’s perfectly OK for an ad to specify that if a tenant has a pet, the rent will be a certain amount more than the stated rent (unless, of course, the property is subject to local rent control, as explained below). The rent is the rent, whether the landlord chops it up into little pieces ($200 for the ceiling fan, $100 for keeping a dog, etc., for a total of “X” dollars in rent), or simply announces one flat sum.
That said, a few things need to be kept in mind:
1. Charging separately and willing to omit an essential service or aspect of the rental. As most landlords know, they must offer fit and habitable premises, which includes basic things such as working plumbing, heat, weatherproofing, and so on. Most landlords would never consider this — but don’t put it past the regrettable few who might offer a “working kitchen” for a separate sum, and be willing to accept a tenant’s “No, thanks, I’ll skip the kitchen.” In virtually every rental situation, a fit and habitable rental must include a functioning kitchen sink, and the law will not allow a landlord to get out of that obligation by offering an “optional” sink, available only if the tenant pays more rent. 2. When the “pet” is alleged to be a service animal. Once the tenant utters the words “service animal,” everything changes. It’s against the law (federal and state) to charge more for a service animal (an animal specially trained to assist a person with a disability). How to confirm that the animal is indeed a “service animal” is another question entirely. 3. Misleading advertising. It’s very risky business to advertise a rental as pet-friendly, state the rent in the ad, then inform inquiring tenants that the rent will be more than the ad indicated if they have a pet. Doing so may constitute false and deceptive advertising. It’s best to state from the beginning, in all ads and conversations, that the rent will be a certain amount more if the tenant has a pet approved by the landlord. This last caveat — that landlords must approve of the pet — is crucial. It’s dangerous to imply that any tenant who’s willing to pay the extra rent can bring any pet he chooses. Careful landlords screen those pets! 4. Rent control. Landlords subject to rent control cannot tack on “pet rent” if that would put the total rent over the legal maximum allowed by the rent control ordinance. 5. Pet deposits. Some landlords charge not only pet rent, but also a separate pet deposit. This is legal as long as the total deposit is at or below the legal maximum (assuming your state has one). However, it’s a bad idea, from a practical point of view, to segregate the deposits. Here’s why: After specifying that the pet deposit will cover damage caused by the pet, the landlord may not be able to use that money for anything else. But what if the pet is better behaved than the owner? The landlord could end up having to refund the entire pet deposit because the pet caused no damage, even though the remaining deposit won’t cover the cost of repairing damage caused by a careless human tenant. It’s better to charge the legal maximum (or as close to that as the market will bear) and have the entire pot of money available for cleaning and repairs, no matter who soiled the carpet. Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of “Every Landlord’s Legal Guide” and “Every Tenant’s Legal Guide.” She can be reached at janet@inman.com.
See Janet Portman’s feature, How to Negotiate a Lease Buyout. American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa.
To subscribe to our blog, click here. Tip #27: Sweeten the Deal
This tip is submitted by Property Manager Claude Smith:
 For the past few years, I have used an incentive package for my tenants, that keeps my properties rented, and money in my pocket. I’d like to share it with you: We the owners of A.J. Endsley LLC would like to propose the following incentives.
1. We like the rent paid on time. b. So, if you paid your rent on time for all of the 12 months, we will refund to you eleven percent ( 11.0 % ) of the base monthly rent. c. If you are still renting from us, these refunds will be delivered to you, IN CASH, early the next December, In an envelope, Labeled: “Merry Christmas”. d. If you are ever late with the rent, or default on the lease in any way, the counter will be reset to zero, and you will have to start all over again. 2. We like you to stay with us for a long time. a. The above Item (1) is cumulative, that is, if your stay with us is longer than one year, it continues into the second and subsequent years. b. So, if you pay the rent on time for 3 years ( 36 Months ) at the end of that third year, we will refund to you, thirty five percent ( 35.0 % ) of the base monthly rent. c. All of the other conditions of Item (1) Apply. d. The maximum that we will refund is fifty percent ( 50.0 % ) of one month’s rent. 3. We like to keep the property rented and minimize vacant time.
a. From time to time, we will inform you when one of our other units becomes available. b. If you refer to us a suitable candidate to rent this, or any of our other units, and they stay with us for one year, we will give to you, one-forth ( 25.0 % ) of their first month’s rent. c. If they stay a second year, we will give you an additional one-forth ( 25.0 % ) of their monthly rent at the end of that second year. 4. We want you to be energy efficient. a. We have installed Low Water Usage Toilets, Shower Heads, Water Heater, Light Bulbs, and a High Efficient Heater. We encourage you to keep the temperatures to a comfortable, but conservative range. b. Basically, lower the thermostats whenever possible. Quicker showers. Water Less. c. This house now, has _____ High Efficient Light Bulbs. We will return to you, $2.00 for every extra one that is present when you exit the property, at the end of your rent. 5. Both Agent and Renter(s) understand and agree to these terms. ____________________________
Agent
_____________________________
Renter (add a line for each renter)
Date:
Claude W Smith is the Owner/Manager/Chief Bottle Washer of A.J. Endsley, LLC, a Property, Rental Company in San Diego, California. See last week’s Landlord Quick Tip.
Do you have a quick tip to share with other landlords? Please email our editor at kim@joinaaoa.org.
American Apartment Owners Association offers discounts on products and services for landlords related to your commercial housing investment, including real estate forms, tenant debt collection, tenant background checks, insurance and financing.
Find out more at www.joinaaoa.org. To subscribe to our blog, click here.
Some Landlords Choosing Surety Bonds Over Security Deposits: But Will It Work for You?
by Bill Gray
As with all of my articles, this one is from the perspective of a landlord collecting tenant debt. Remember, I am on the back end of the deal,  looking at damaged rental units and unpaid rent. I will limit my comments about tenant surety bonds to my experience and how they affect debt collection after a tenant moves out.What is a surety bond? A bond is not a deposit. A surety bond is a product that a prospective tenant can purchase in lieu of a traditional security deposit. The bond is normally nonrefundable and costs significantly less than a security deposit, thus reducing the tenant’s move-in costs. I have heard it presented as a type of insurance policy to a prospective tenant. I understand that most, if not all, of these products are underwritten by insurance companies. My research indicates that there are a couple variations to this type of service depending on the company. Does a surety bond relieve the tenant of any financial responsibility to the landlord? No, it doesn’t. A surety bond is usually an insurance-type product, but it holds the tenant responsible for any debt that is owed the landlord. Depending on how the service is structured, the tenant who leaves owing a balance will be pursued by either the landlord or the surety company for the amount owed. Do tenants who purchase a bond and later leave the property owing a balance generally pay what they owe? My experience is that collecting from a previous tenant who bought a surety bond is more difficult than collecting from a tenant with a traditional  deposit. Collecting tenant debt is a tough sell to the debtor with a traditional deposit, and a surety bond often makes the difficult debt collection process even more difficult.
Collectors who do not understand the surety bond and how it works are at a big disadvantage when trying to overcome objections from the debtor.
Why are tenants who purchase a surety bond less likely to pay than those who pay a deposit? There a couple possible reasons for why these previous tenants are more likely to refuse to pay their balance. In addition to the usual objections, they often feel they do not owe anything because “they had an insurance policy.” Even though the bond sales literature and contract state that the tenant is liable for any charges when they move out of the rental unit, the tenant often “understood” something different when they purchased the bond. Imagine being a fly on the wall in a leasing office. Here comes Mr. Prospect looking for a home to rent. Funds may be tight and he is looking for the best deal he can find. He is greeted by the smiling landlord or leasing agent anxious to rent an empty unit. He is presented various floor plans, locations, and lease options. “How much is the deposit?” he asks. “Well, Mr. Prospect, you have two options: you may pay a traditional deposit of $1000 or you may purchase a nonrefundable bond for $100.” What did the prospect hear? Often, he heard $1000 (thinking, “Wow, that’s lot of money!”) or he heard blah, blah, blah $100 (thinking, ”That’s not much.”). He is also probably thinking that moving is expensive and that this is a way he can save money on the move. Even if the details of the bond were fully disclosed at the time the bond was purchased, often the new tenant could not explain those details. If the word “insurance” was used at the time the bond was sold, this only strengthens the tenant’s objections to paying anything he owes the landlord when he moves out. His experience with insurance is his car insurance. He pays his car insurance premium so that if he has an accident, he won’t have to pay the damages; the insurance company pays. In the average tenant’s mind, the deposit bond he purchased to rent his apartment is no different. He bought the bond, and although he may have damaged the apartment, he feels he is covered because he bought the “insurance.” I have no way of knowing for sure, but another good question to ask related to this process is: How well does a tenant who believes they have an “insurance policy” on damage to their rental care for the unit itself? It is plausible that a less than desirable tenant may see the purchase of what he feels is insurance as an excuse not to take care of his rental unit. Surety bonds are relatively new to the residential housing industry. If the use of this service fits your business model, I encourage you to use it. However, from a collection standpoint, I strongly urge you to explain in detail to your new tenant what the bond is, how it works, and what his financial responsibility will be. An extra five minutes explaining this may save you thousands of dollars after the tenant moves out. Copyright 2009 Bill Gray
Bill Gray is a tenant debt collection specialist. For tenant debt concerns, email him at Bill@thelandlorddoctor.com. Visit Bill Gray’s blog at TheLandlordDoctor.com.
See our seven part series, Vital Tips to Increase Your Debt Collection. American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa. To subscribe to our blog, click here. by Janet Portman, Inman News
Q: I am about to rent an apartment in New York. The lease says that the agreement will be “governed, treated, and interpreted” according to the  laws of New Jersey. Why is the landlord doing this? Is it legal? –Keith F.A: Your landlord has inserted what’s known as a “choice of laws” provision in your lease. I’ll bet that the landlord lives in New Jersey, has a New Jersey lawyer, and would prefer that New Jersey law be applied in any dispute, simply because he and the lawyer are familiar with it.
They may also think that New Jersey’s landlord-tenant laws are more favorable to landlords than those of New York, so applying them will give the landlord an advantage.
But it won’t work. Courtesy of an age-old doctrine from England, courts will apply the literal “law of the land” to a dispute concerning the ownership of real property, including disputes about leases. A little thought will show you why: If litigants could specify that a lawsuit over land be decided according to any set of laws they might choose, you’d quickly end up with chaotic and inconsistent decisions concerning each parcel. Imagine, for example, a lawsuit concerning title to land in Arizona, decided according to California laws, and then challenged by later owners, but this time according to Nevada laws.
But wait, there’s more. If this ploy could succeed, we’d expect many leases to provide that they will be interpreted according to the laws of … well, I hate to say it, but Arkansas takes the prize. It is the sole state in the union that does not require landlords to offer and maintain fit and habitable rentals (until recently, Alabama and Colorado also shared that dubious distinction). If landlords could provide that any dispute regarding rentals in their state be decided by the laws of Arkansas, these owners could circumvent their state’s habitability requirement — and a whole lot of other tenant protections, too. In the words of Earl Warren, “You just can’t do that.” That’s not to say that choice of laws provisions are always tossed out. When the parties to a contract that doesn’t involve real property negotiate at “arm’s length” (as coequal businesspersons), and when the choice of laws designation will not offend the public policy of the state that’s asked to apply a sister state’s laws, a choice of laws clause is often upheld. But you can see right away how this lease clause fails both these tests, too. First, most judges realize that residential tenants and landlords as parties do not negotiate at arm’s length. Though there are exceptions, to be sure, most of the time the tenant is relatively unsophisticated, dealing with an owner or management company whose business is to rent residential property. In addition, courts recognize that housing is a necessity, which often means that tenants cannot reasonably walk away from a “take it or leave it” lease. In tight markets especially, judges know that even well-informed tenants often have no real bargaining power. Second, and more importantly, judges won’t apply a sister state’s laws if doing so would be against the public policy of their own state. You can imagine what a New York judge would say about disregarding New York law and depriving a New York resident of the benefit of its tenant protections. To take an extreme example, if the rental is under rent stabilization or rent control, there’s no way a New York judge will agree to bypass those laws and apply another state’s law. I’d have a conversation with the landlord and point out that this attempt is likely to fail. If you get nowhere, consider looking for another rental. Though you’d probably prevail in any court action in which the landlord attempted to get the judge to apply New Jersey law, you’ll spend time and expense doing so. And even before getting to court, this attempted end-run will get in the way of your attempts to settle the dispute, because you’ll first have to agree on whose law to apply — and if there’s no agreement on that score, you won’t get beyond it. Finally, it’s not a good omen — you’ll be better off if you choose a landlord who manages his property in a more straightforward manner. Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of “Every Landlord’s Legal Guide” and “Every Tenant’s Legal Guide.” She can be reached at janet@inman.com. Copyright 2009 Janet Portman See Janet Portman’s feature, How to Negotiate a Lease Buyout.
American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa.
To subscribe to our blog, click here. by Howard Bell
The report, released last week is another green shoot pushing upwards. Home prices in the U.S., as measured by the S&P Case-Shiller home price
 indexes, rose in July over the previous month, as 18 of the 20 metropolitan areas comprising the benchmark saw saw a boost to real estate values (see chart here.)For the 16th consecutive month, every region saw year-over-year declines, but the pace of those declines continues to decelerate, according to the Wall Street Journal.
The ten-city index is down 33.5% from its mid-2006 high, while the 20-city index has declined 32.6%. UMM and DMM Confirming the stats market shares built to be reflective of moves in home prices acted as they should. These market tools are investments in their own right, but they are also trend confirming tools. Two new investments based on the Case Shiller indexes allow people to invest in the direction of home prices. MacroShares Major Metro Housing Up Trust (UMM) and Major Metro Housing Down Trust (DMM). Last week, UMM had gained more than 3%, while DMM was down by about the same amount. Since their inception in June 2009, UMM has jumped by nearly 35%, while DMM is down nearly 25%. (see chart here.) Reflecting investor expectations for the U.S. housing market( home prices will continue to rise over the next five years). If you look at the price action of the UMM vs the DMM, you can see investors think that homes will continue to rise. Looking at the Dow REIT index, you see similar strong moves to the upside. Personally, I think the markets are ahead of themselves but they are a strong confirmation that people are beginning to look past the bust and are betting on the future. Early? Yes. We have the commercial recasts and the option ARMs to get through. The markets enthusiasm is emotional, we raised the flag because we avoided a great depression, but now there is more reality to face. The good news, The Economist made an observation I loved. American is brilliant at fixing itself. Howard Bell PFP CCRM is the founder/editor of Your Property Path.com, featuring over 450 articles on property management, Your Property Path SF, trade talk for the San Francisco real estate industry, Your Property Path News Brief, snap news updates and real estate market info, and Your Property Path Amazon Store. Howard is a property manager in San Francisco and holds a certification in financial planning.See Howard Bell’s feature, Get Your Property Rented Faster. American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa. To subscribe to our blog, click here. Who gets security deposit in divorce?
Landlord panics after ex-tenant threatens property damage by Robert Griswold Q: Our tenants are currently on a month-to-month rental agreement and apparently have just gone through a separation and divorce. He left several months ago and she and the children have been in the house for  the past nine months. She has paid the rent and the utilities and has maintained the place in good order. She had more money coming in during the separation and now that the divorce is final, she tells me that she has less income from her ex-husband so she needs to move to a less expensive home. She gave me a written notice last Friday that she is moving at the end of the month, and the ex-husband showed up last night at my house and angrily demanded that he get the full security deposit back right then and there. I told him I couldn’t do that, but he insists that if he does not get the security deposit back in the next 72 hours, he will damage the house. He has not contacted me again, but his actions have made me think about who would be entitled to the return of the security deposit. The original lease was signed four years ago, and they have been on a month-to-month lease beginning the second year. She called me in October and told me that he had left and that she would be paying the rent in the future. At that time, he did not ask for the security deposit back. Who is entitled to the deposit, assuming that he does not really damage the property? A: While your situation is full of drama, the answer is actually quite simple. Once the rental house has been vacated, you should go through and inspect it just like you would for any move-out. You then will determine the proper amount of the refund, if any. Be sure to send the security deposit reconciliation report to the attention of both the husband and the wife at their last-known addresses, which may be your rental house. If there is a check for any remaining security deposit, you should make the check payable to both the husband and the wife, as they were both parties to the original lease. If they have separate addresses, I would suggest that you send the original security deposit accounting and the check to the wife as the current occupant with a copy to the husband. They could have avoided any confusion if they had provided you with a written agreement that indicates that one of them has relinquished any claim to the security deposit. Often in dissolution actions, the court may order that the security deposit is the sole property of one spouse, but you should comply only with a court order and not verbal representations or you could find that the aggrieved spouse will be demanding the security deposit or threaten to take you to small claims court. In many instances where you are presented conflicting information that seems credible, it may actually be better to go to small claims court and let the court decide who is to receive the security deposit refund. I think that you should not ignore the irrational behavior of the husband coming to your home and threatening to damage the rental home if you didn’t give in to his demand for the security deposit. You should notify your local law enforcement and you may also want to contact the wife so she is aware, as she could be held legally responsible by you for any damage to the rental home at the time of move-out. If the damage happens after she vacates, then law enforcement may want to start their investigation with contacting the husband. This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of “Property Management for Dummies” and “Property Management Kit for Dummies” and co-author of “Real Estate Investing for Dummies.” E-mail your questions to Rental Q&A at rgriswold.inman@retodayradio.com. Questions should be brief and cannot be answered individually.
See Robert Griswold’s feature, After the Honeymoon: Rent Increase? American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa.
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Q: One of my tenants has a broken leg and is using a wheelchair. 
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