Can you keep the security deposit after a tenant breaks the lease? When a tenant breaks the lease on your rental property, you could be entitled to keep the security deposit based on your state’s laws.
Q: Can I keep the security deposit my tenant gave me after he broke the lease? Here’s what happened: I own rental property in California. My tenant broke a two-year lease within the first two months of signing. He left the house without paying the rent. I called a real estate agent and advertised the property and got it rented. Can you advise me if I can deduct the amount I paid for the real estate agent from the security deposit and the loss of rent?
A: What you need is an attorney to help you with your question. Most municipalities and states (including California) have rules pertaining to security deposits and leases. Due to your tenant’s bad behavior, you may be able to legally keep the entire security deposit or just a part of it.
You should first review the fine print of your lease. What does the lease document say happens to the security deposit in case of a default by the tenant? Then, you have to look at your state laws and local ordinances to figure out if any law or ordinance applies to your situation. Once you get a handle on what the lease, laws and ordinances say, you can make a decision on what you can do.
From a lease perspective only, most leases say that a landlord is entitled to recover his or her damages when a tenant breaks a lease. Those damages can include the amount of rent that was unpaid and remained unpaid while you searched for a replacement tenant and may include commissions and other costs you expended to get that other tenant. Most lease documents would allow a landlord to deduct those costs from the security deposit.
But this is where it gets tricky. Some state laws only allow certain items to be deducted from security deposits and some municipal ordinances require you to provide receipts and proof that you spend money — and only for certain items — before you can deduct those sums from the security deposit. Finally, some ordinances will penalize you, the landlord, if you fail to comply with the statutes and ordinances even when the tenant was at fault.
So if you fail to comply with the laws and ordinances, it could cost you a pretty penny. For these reasons and depending on the amount of money involved, we think you should connect with a local attorney who is knowledgeable about all applicable laws.
You might be able to research and get more information on your own, but you’ll be taking a risk that if you do it wrong, the tenant may have a claim against you. In some places, you might have to sue the tenant to get some of the damages you are entitled to, so make sure you understand what your lease says and what laws apply to you and your situation.
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