THE  SECURITY DEPOSIT DISPUTE

When receiving a Notice of Intention to Impose a Claim on the Security Deposit, invariably a Tenant will one day dispute what you have charged. You will usually be notified of this in a long rambling letter, in which the Tenant goes on and on about how the premises were left cleaner than when he/she moved in. The Tenant’s letter usually ends with a threat that if she does not receive her money back within a certain period of time, she will sue. Sometimes you will receive a letter from an attorney and if you do, you MUST take it seriously.

What is the Manager or Landlord Required to Do When a Security Deposit Claim is Disputed?

The easy simple answer is NOTHING. Contrary to popular belief, there is no legal obligation to respond in any way to a Tenant’s verbal or written security deposit dispute. Remember, your response can be used against you so if you respond, chose your words carefully.  Should you completely ignore it though?

The Four Options When There is a Dispute

1. Do absolutely nothing and ignore the Tenant’s dispute. This will most likely infuriate the Tenant. You will either hear nothing from the Tenant or you may receive a letter from an attorney for the Tenant, or a lawsuit could be filed against you, the property owner or both. Chances are you will hear nothing but you never know.

2. Give the Tenant what he or she wants. If the Tenant is demanding a return of the security deposit in full or in part, you can simply cave in and return the money. That is a fairly certain way to calm the Tenant down, but it is doubtful that you or the property owner really wants to do this. If you are the property manager for an owner, it is recommended that you notify the owner of the dispute and ask them if they would like to do this. Many owners do not want to be remotely bothered with a dispute and may choose this to avoid any possibility of litigation. If a dispute blows up into a major lawsuit, the property owner could blame you for not giving them this option in the beginning. Never try to guess what path an owner will take. Let them make this decision.

3. Respond to the Tenant. Tell the Tenant in writing that you have reviewed the file and that the charges stand. There is no need to explain the charges if they are clear. Remember that you are building a paper trail when you respond, so be careful you do not disclose any weaknesses. Your response will at least show that you are not ignoring the Tenant and may calm the Tenant down.

4. Receive settlement authorization from the owner. After review of the file and possibly consultation with the owner, you may feel that certain charges are not easy to prove or were not warranted. If you receive a fixed amount of settlement authority in writing from the owner, you or your attorney can attempt to settle the matter. If settled, a release can be drawn up and the money disbursed according to the agreement. If settling, do not send the Tenant money unless a release is used  

Can You Disburse a Disputed Security Deposit?

The law is 100% unclear. Florida law does not specifically allow you to disburse the security deposit as you see fit. The days of having to notify FREC, file an interpleader or file a lawsuit in court are OVER. Do you increase the chance of getting sued if you disburse the balance to the owner? Yes.  

Suppose the Tenant sues?

If the Tenant hires an attorney and sues, and if the judge determines that you took one cent too much, YOU WILL LOSE the case and you or the owner will have to pay 100% of the attorney’s fees of the Tenant. We have seen as little as $1000 and as much as $35,000 in attorneys fee awards. Can a Tenant pay their attorney? They usually do not have to. There are hundreds of attorneys who will represent the Tenant FOR FREE and on a contingency basis.

Some Final Advice

ALWAYS MAKE SURE YOU SENT OR SEND THE MONEY THAT YOU WERE PLANNING ON GIVING TO THE TENANT. ONE OF THE WORST MISTAKES IS TO HOLD THE TENANT’S MONEY. IF THEY WERE GOING TO GET SOME MONEY BACK, MAKE SURE THEY GET IT BACK WHETHER OR NOT THERE IS A DISPUTE. IF YOU WERE GOING TO GIVE SOME OF THE MONEY BACK, GET IT BACK TO THEM. IT IS THEIR MONEY.

In the event of a lawsuit, if you manage the property for an owner, you do not want to be named a party to the lawsuit. You are merely holding the money, or you may have already disbursed. Always make sure that you have the following wording clearly stated in your lease agreement:

DISPUTES AND LITIGATION: In the event of a dispute concerning the security deposit and tenancy created by this agreement, TENANT agrees that if the premises are being managed by an agent for the record owner TENANT agrees to hold agent, its heirs, employees and assigns harmless and shall look solely to the record owner of the premises in the event of a legal dispute.

 LAW OFFICES OF HEIST, WEISSE & WOLK, P.A.

1-800-253-8428

INFO@EVICT.COM