KEY RETURN AND POSSESSION DATE

Many property managers consider the return of keys as the date that the resident gives possession. When the key return occurs, they begin to count the 15 or 30 days as required by law for returning the security deposit or making the claim. Sounds reasonable, right? Wrong. This method of determining the possession date gets countless managers in trouble, as the resident argues about the key return or key return date, resulting in potential accusations of a violation of the security deposit claim/return laws.

The Lease

Your lease most likely has a clause which states that the resident is to turn in the keys, garage door remote, etc., upon surrender of the premises to you. This reminder is important, as often the resident leaves forgetting to return these items, and besides, when the key is returned, it is usually clear that the resident has in fact surrendered. Unfortunately, like any other lease clause, residents will do whatever they want. They do not always do "what they are supposed to do".

Your Company Policy

You may have a company policy that states that the resident has not surrendered the rental premises unless the keys are returned. While this seems like a logical policy, the reality of the resident not returning the keys can make this policy silly, as most managers have taken possession of a rental unit at one time or another, even when no keys were ever returned. The policy may be good in theory, but in reality it does not always work. Furthermore, many judges do not care much what your company policy is.

What is the Surrender Date?

Your residents are supposed to leave at the end of October. They have given notice that they are leaving, their lease may be expiring, or possibly you non- renewed the residents. At the end of October, no residents show up in your office to drop off the keys. The question now is whether the residents have indeed surrendered.

Rent and Keys

It would seem logical that if you did not receive the keys from the residents on the surrender date, the residents would continue to owe rent until such time as those keys are returned. This is simply not practical, as the chances are the residents have vacated on the surrender date, but for whatever reason or no reason at all, they drove off with the keys.

The Manager’s Actions

The manager who does not receive the keys on the surrender date often decides to continue charging residents rent. This amount will be deducted from the security deposit or could exceed the security deposit funds, resulting in the residents owing more money than the security deposit, which amount could eventually end up on a credit report.

Now For the Dispute

1. Charging the resident rent: Once the residents receive the Notice of Intention to Impose Claim on Security Deposit, the fireworks begin. The residents are furious that you would have charged them rent, when in their opinion, they vacated the property, and since they were not living there, they should not have to pay any further rent. They may even bolster their argument by showing you the notice of vacating they gave you or the notice of non-renewal you sent them. In your mind, since no keys were returned, they owe rent. In their mind, they vacated just as planned and owe nothing.

2. The 30 day Notice Period requirement: The manager receives the keys on the 4th day of the month or goes to the property on the 4th and finds the keys sitting on the countertop with a little note next to them and a forwarding address. A common problem occurs when the manager begins the counting period of 30 days to send the claim letter as of the key receipt date. Typically the problem is caused when the manager waits until what they consider the 29th day to send the notice out. Savvy residents know about the law regarding the security deposit and the timeframes under which the manager is working. The result is that the residents are now demanding the full return of the security deposit, as in the residents’ opinion, you sent it out late. The argument then becomes whether you sent the notice out on time. The manager argues that the resident did not return the keys until the 4th or not at all, since the keys were left on the counter. The residents argue that you knew or should have known that they had vacated, and you should have begun counting your 30 days from the date that the residents were supposed to vacate. The residents may even argue that they returned the keys to your receptionist or dropped them in the drop box. Who is correct, the residents or the manager? It is tough to predict how a Judge will rule under these facts; the best answer is for the manager to avoid this problem.

Avoiding the Problem

If you are told by the residents that they will vacate at the end of the month, or you gave them a notice of non-renewal for that date, it is YOU who should be going over to the property on the first day of the month and seeing if they have completely vacated. Sitting in your office waiting for keys which may never be returned is patently foolish. Additionally, waiting until the 28th, or 29th day from the key receipt date to send the deposit claim letter is dangerous and increases the odds of a dispute immensely. NEVER rely upon the return of the keys to begin the counting of your days when making the claim upon the security deposit, regardless of company policy or lease wording.