Legal help deposit issue - Posted by CW

Posted by Frank Chin on August 21, 2003 at 08:55:31:

Hi CW:

Do you do things the easy way or the hard way??

First, doing everything verbally is a NO NO in the Landlording business. You mentioned the prospect completed a rental application. My application has a deposit agreement as a part of it. Does yours have one??

As for knowing the law, it depends on the jursidiction and how tenant friendly it is. Here in NY, lawyers tell me, the outcome of cases depends on the mood of the judge that day.

So my point is, here in NY, even lawyers knowing the law wind up guessing.

I learned in the Landlording business, or any business, its sometimes counterproductice to try to make the extra nickle. I give myself 30 days to rent out a place, and if the first guy falls through, and I have to advertise another week and rent it out again as of the 15th, I’m still ahead of the game. In the past, when the market was slow here, I have advertised up to 3 weeks to have a place rented.

So what if you’re right. If they come back suing you, and you have to spend time and effort to go to court and argue the case, the amount of money involved for 15 days is not worth the effort IMHO.

Give the money back, and have a deposit agreement done in writing the next time.

Besides rentals, I also own a auto repair, tire retail & wholesale business. Not long ago, a customer claimed a tire repair was done improperly, and he wanted the cost of a tow plus a brand new tire. My manager got into a big fight with him, and basically said take me to court, saying that there’s legally no proof.

The customer finally spoke with me. I overruled the manager, authorized a new tire, and wrote him a check on the spot for $130.00. The deal cost us $200.00

I explained to the manager that the customer could have easily gone to some doctor, fake injuries, and sued for much much more. He had a blowout and a police report.

The customer was so happy that he was back several weeks later, and we more than made back the $200.00. At that point, the manager, a little miffed at being overruled, was pleasantly surprised, and agreed that I did the right thing.

On the other hand, the previously owners of the place, the people that I bought the place from, decided to go to court instead of settling a minor dispute with a customer. A tire fell off a car several weeks after the purchase of the new tire. The customer found an ambulance chasing lawyer file a “one million dollar” lawsuit against them.

Somehow, they expected the insurance company to handle matters. The insurance company dropped the ball, and now they have a “one million” dollar default judgment against them.

Conclusion. Its sometime easy to say “sue me” than to look at the bigger picture.

Frank Chin

Legal help please…security deposit issue - Posted by CW

Posted by CW on August 20, 2003 at 19:07:54:

I live in Tx, and I need some advice, preferrably from someone who knows the law, not just guessing… I have a rental unit up for rent, and this person comes by and looks inside. Says that they want it, but don’t have a deposit. My policy is that i will only hold the place for someone if i receive a security deposit, since i’ve been burned in the past by taking someone’s word. They’re waiting on the tax check we just received, but didn’t have it yet, so i tell them to call me when they get it and i’d let them know if it was still available. The next morning at 7am, this person calls to tell me that the parents would lend them money, she definitely wanted to rent my place, and that i could get the security deposit that day. Since they were going out of town, I waited until the 2nd to get the security deposit from her father. He gave me cash, i gave him a receipt. The next day she fills out a rental application, and i tell her that the place is hers conditional on any negative info i may find. She even has her mother and friend with her, is very excited about the place, and even tells me that she wants to paint the kitchen. I confirm her ok the next day, then that evening her father calls me to say that she wants to back out and that how i handle the security deposit is up to me. So i figure that i have to find a new tenant, readvertise, and the security deposit is mine until i find a replacement. I find a new tenant that signs a lease effective on the 15th. I planned on returning the difference to the original person on a pro-rated basis, 2nd thru the 15th. Today i get a call from a lawyer saying that she didnt sign a lease so i can’t keep any money. I have not returned anything yet because from my understanding i have 30 days regardless to return the money, and this happened this month. So , my questions again are:

  1. Can i keep any security deposit based on a verbal agreement(stated several times) that a tenant wants the property and i agreed to rent?
  2. Do i have 30 days to return any difference if i do get to keep a prorated amount?
  3. My wife had a similar previous incident where they kept all her deposit…ws this legal?
  4. What amounts can i subtract from security deposit? Advertising? Prorated days without a new tenant?

Thank you for your help