Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
My tenants already signed a lease, paid the deposit ($1000) and the first month's rent ($1000). Before they were to move in, they wanted to terminate the lease. They were complaining the wall needed to be repainted and the carpet needed to re-cleaned. There were no documented agreements on any of these and I believe the rental property is in good, if not mint, condition. Not wanting to deal with them in the future, I agreed to release them off the lease and asked them to return the rental keys first. Their deposit as well as their first month's rent will be returned within the following five business days after they surrender the keys. However, the tenant and their lawyer demanded to have $1000 back on the same day when they return the keys, or they would sue me in court for illegally holding their money.
I feel they are being too unreasonable. Is holding their money for a maximum of 5 business days too long?
Always write something up to document what you are doing, and why. Have them sign, you sign, and return their funds. Be sure that is also in your document - that their funds in an exact dollar amount (1 for rent, 1 for deposit) is in your document along with the lease date, property address, names of parties involved. Everyone signs, everyone gets a copy. you put a copy with their application etc in whatever recordskeeping system you use. Note that all keys were returned as well.
I see no reason to hold their funds if you all agree but be sure to document the transaction in writing. Why do you feel the need to hold their funds? They didn't move in so there's no cleaning or damage to check on.
By "mint condition" then I assume that the walls were all freshly painted and the carpet is brand new? That is "mint condition".
Then do an inspection, make sure that they did not damage anything or leave any possessions. Yes, definitely wait until their check clears but t hat should only take 1 business day unless their check was out of state. Word to the wise - always demand deposits be cash or money order, or cashier's check and also have a policy that NO out of state checks are accepted. That should be in your written policy that applicants see when they get their application to fill out.
Once their checks are cleared, I am thinking about returning $1000 when they surrender the keys and send them a check for $1000 within 5 days to allow me have enough time for a thorough inspection.
You really should do the inspection with them present. That will cover you much better. And, check your state's statute on return of deposit after lease expires or terminates in whatever manner. I'm sure it's more than 5 days, but you have a bit of an unusual situation here.
I believe in MN it is 21 days after normal lease termination.
Thanks for your helpful suggestions.
Whre did you get 21 days from? I thought the rent portion must be returned immediately upon demand (not sure how to deal with issues of waiting for a check to clear) and the security deposit portion within 21 days.
Not positive on the law here, but as the OP would be legally within his rights to keep some of the money, as they DID sign the lease and pay the security deposit. So, I don't think a court anywhere would see issue with him returning the portion with the keys and the portion after the check clears, as legally it is very possible he could have said the deposit (or the rent once paid and required a 30 day notice to vacate, etc) was not refundable. And, as the case will take WAY less time to get to court than 5 days, let them file. There will be no damages that are not covered by the OP returning the security deposit in full, especially after they had keys and access to the property. They legally had possession and the LL is within rights at that point to hold some portion of the rent as well as to take the time to ascertain if everything is in the same condition. So, returning all monies, within 5 days of receiving the keys, to tenants who legally had possession is not going to make the LL look bad.
If you are worried about the check you can request that they give you proof that the check has cleared their bank and paid. All they have to do is call their bank for a copy of the paid check or proof the check has cleared the account (transaction print out) They can black out any personal info on the print out.
Bad checks can take up to 2 weeks to come back as a bad check. Yes it takes 1-2 days for a check to be available in your account after you deposit it, but that is at the discretion of your bank's funds availability policy and does not mean the check is good. That's why people get the shaft when they fall for Canadian lottery scams and the like.
Once you know the check won't come back as bad or fraud then you should give them the funds back. Their lawyer can't blame you for that. And I hope a judge would agree.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
