Sunday, February 4, 2007

Landlord-Tenant matters: security deposits

Since I represent both tenants and landlords, this post may be a bit schizoid. Security deposits present problems for both inexperienced landlords and unsophisticated tenants. Indiana Code IC 32-31-3-12 sets out the law on security deposits.

Within 45 days after the end of the lease and taking possession of the rental property, the landlord must give a written itemized accounting of how the landlord spent the damage deposit unless the tenant has given the landlord written notice of the tenant's new address.

Both tenants and landlords need to pay attention to when the 45 days start. The 45 days start when the tenant moves out and gives the keys and a writing showing the tenant's new address to the landlord.

Both the tenant and the landlord need to keep track of the time after the tenant leaves, gives control of the property to the landlord and gives notice of the new address.

If the tenant moves out at the end of the lease, the tenant should get a receipt from the landlord showing the date that the tenant moved out, that the tenant delivered the keys and gave the landlord a writing showing the tenant's new address.

If the tenant cannot get teh landlord to sign the receipt I just described, then the tenant should send a certified letter giving the landlord the tenant's new address. The tenant needs to keep a copy of the letter and the green, certified mail card. The card shows when the landlord got the tenant's letter.

The landlord needs to be meticulous when itemizing the expenses applied against the security deposit. The landlord needs to be particularly meticulous when there was an eviction or the tenant claims the landlord broke the lease. The security deposit statute requires the landlord "to return to the tenant the security deposit minus any amount applied to: (1) the payment of accrued rent; (2) the amount of damages that the landlord has suffered or will reasonably suffer by reason of the tenant's noncompliance with law or the rental agreement; and (3) unpaid utility or sewer charges that the tenant is obligated to pay under the rental agreement...."

Tenants should photograph or videotape the rental property before moving out. The landlord will have its photographs and the tenant needs to have their evidence ready.

The statute provides for specific penalties if the landlord fails to comply with the statute. The tenant's penalty for not giving the landlord notice of the tenant's new address is the landlord can continue to hold the damage deposit. A landlord failing to comply with the statute may be liable for the entire deposit and for the tenant's attorney fees.