A security deposit is a sum of money that a landlord takes from a tenant other than payment of rent. It serves as protection to the landlord if the tenant breaks or violates the terms of the lease or rental agreement. The security deposit may be used to cover damage to the property, cleaning, key replacement charges, or back rent. Depending on whether or not the residence is furnished, the security deposit may vary (up to three times the rent for a furnished unit, up to twice the rent for an unfurnished unit). Security deposit disputes are among the most common issues that may come up between landlords and tenants.
These very frequent cases may be resolved quite easily out-of-court, thanks to online arbitration, provided both the landlord and the tenant understand their rights. There are three simple steps that can be taken through Online Dispute Resolution (ODR) platforms. These are 1) giving legal reasons for your claim, 2) knowing your legal rights, and 3) providing evidence. As these steps are applicable to both tenants and landlords, both may gain valuable insights on how best to present their case, and expect a fair outcome. Whether you are being sued by your tenant for keeping their security deposit, or you believe that your landlord has retained your deposit unfairly, these steps should help you arrive at the best possible resolution.
1. Provide legal reason
Security deposit disputes arise because of a disagreement over who should keep the deposit, often initiated by the tenant questioning their landlord’s right to keep this sum. If you find yourself in this situation, providing your tenant with legal reasons for your keeping or deducting from their security deposit is the first step to resolving the dispute quickly and peacefully. Two common reasons for which you may keep a portion or all of a tenant's security deposit are damage to the residence in excess of the normal wear and tear, and unpaid rent. If this is the case, then you will have to notify the tenant within a certain period.
If you believe that your landlord has unjustly retained a portion or the entirety of your security deposit, you are entitled to requesting its return by sending a "demand letter." This is the best step to take at first, as not sending a written demand may result in your losing the security deposit altogether. This document can easily be submitted through ODR platforms.
2. Knowing your rights
Though you may have a valid reason for retaining a tenant's security deposit, you are liable, as the landlord, to follow all procedures correctly. This means respecting security deposit laws, the manner in which you hold the deposit, as well as time limits. In general, after a tenant moves out, you have 21 days to either return their deposit in full, or provide the tenant with a written reason for your keeping part or all of their security deposit. This can take the form of a letter, a itemized list of all the deductions made, or copies of receipts for the charges. If you pass this required deadline by which to either return the security deposit, or to send a written document justifying your retention of the deposit amount, the tenant can send you landlord a letter disputing your holding of the deposit. ODR platforms will invariably remind you of your duties and rights as landlord, so that you can be sure that you have covered all bases.
As mentioned, if your landlord misses the date by which to warn you of their course of action regarding the security deposit, you are entitled to requesting its return. However, as for the landlord, the tenant has a certain statute of limitations within which to operate (usually a year). Furthermore, the tenant should know the standards and protocol associated with the unit they just exited. If you plan on moving out of your unit, you must provide your landlord with at least a 30 days' notice in writing. Otherwise, you are likely to be charged for rent, even after you move out. Another important point to know is that tenants are can only be charged for damages to the apartment in excess of normal wear and tear. This means that you cannot be charged for a worn out appliance, such as a washing machine. Such replacements fall to the landlord, and retaining part of your security deposit to do so constitutes bad faith, and should be disputed. Overall, knowing your responsibilities as tenant can be crucial to disputing the retention of your security deposit. As they will do for landlords, ODR platforms ensure that you are aware of your legal rights.
3. Providing evidence
This step is easily the one that requires the most attention to detail on your part. Having evidence that can support your deductions from your tenant's deposit will help strengthen your case. If you are claiming damages on the apartment, it will be useful to have photos to back this claim. Generally, it is advisable to fill out a checklist before the tenant has moved in, to compare the unit condition before and after the tenant’s occupation. If the tenant owes you back rent, you will need to show a certified document requesting this money. If they have breached their lease in another way, do you have any proof of such? Naturally, such evidence is crucial to validating your claim, and can be easily filed thanks to ODR's relaxed rules of evidence and easy document circulation.
Planning ahead can be instrumental to your getting your security deposit back without any hiccups. When you send your landlord a 30-day notice to end your tenancy, make sure to make a copy of the notice, and request a return receipt. When your landlord comes in for the final unit inspection, ask to be there to make sure you are both on the same page. Document your cleaning and repairs, and any possible damage to the apartment that is apparent when you first move in, so that you are not held responsible for it. Finally, give your landlord your forwarding address to ensure they send you the deposit that is due to you. Again, ODR platforms make submission of evidence easy and intuitive.
Costs and Benefits
You could have followed the three above steps scrupulously, and still be sued by your tenant, or have your security deposit wrongfully retained by your landlord. Sometimes, covering your bases is the best you can do to justify your claim, and your good faith. But if even that does not resolve the dispute, then compromise is the next best thing. If you are not satisfied with your landlord's deductions, or your tenant's maintaining of your unit, then work something out. If you can come to an agreement–where perhaps the landlord will return a portion of the deposit for additional cleaning on the tenant's part--put it in writing and sign it. ODR platforms allow you to create such legal contracts easily. If you resort to online arbitration to resolve this matter, remember that it is a binding process that offers little avenue for appeal. In relatively low-stakes but high-commitment cases such as these, it may be best for you to ask your arbitrator to facilitate a negotiation process, to ensure the easiest outcome to your security deposit dispute.
When resolving a security deposit dispute, preparedness is key, whether you are a tenant seeking to recover your deposit, or a landlord looking to repair apartment damages. In both scenarios, having legal reason for your claim, a strong understanding of your rights, and thorough evidence to back your demand can ensure you win your case easily, thanks to the efficiency and ease offered by ODR platforms. Though haggling may arise from either party, regardless of how prepared you are, these platforms will always offer an alternative, so that both parties may come to a mutual and civilized agreement.