How to Resolve Security Deposit Disputes

As a landlord, your first and principal course of action is to provide a verifiable legal reason why you want to keep a security deposit. When a tenant is cognizant of the fact that you are acting within the ambits of the law, they'll realize that your actions are not ill-intended but rightfully legal. Howbeit, it is in the tenant's right and defense to question your legal right to keep their security deposit.

It is very important for a landlord to review the provisions made in their state laws regarding landlord-tenant law. This enables the landlord to determine the legal reasons for which you can take deductions from a tenant's security deposit. There are two common reasons that allow a landlord to keep a tenant's security deposit; they are damages made to the apartment which exceed the normal wear and tear and unpaid rent. In the case where a tenant adhered to the terms of their lease, had a smooth move-out process with no damage made, and paid their rent on time, you may find it difficult to make a case that justifies the deductions you have taken.

If a landlord has a justifiable legal claim to withhold part or all of a tenant's security deposit, they should go ahead and inform the tenant that they are legally allowed to keep their deposit in accordance with the provisions of the state laws. A tenant will rest their case once they realize their landlord is lawfully allowed to keep a portion or all of their security deposit.

So, you have a legal right to withhold a tenant's security deposit; that's not enough; you must equally make sure you followed all security deposit procedures correctly. The reason it is important for you to follow the law procedurally is because a tenant may not be satisfied with your legal right to withhold their security deposit. Consequently, they'll look for procedural errors you might have made, question the security deposit laws, and even ask if you were required to issue a receipt after they paid their security deposit. 

Keep in mind that you can have an irrefutable legal right to keep a security deposit, but if you did not follow local ordinances to the latter, it might be forcefully requested of you to refund the security deposit to the tenant. A good example is some states require that written notification be made to the tenant about the bank in which their deposit is stored and the interest rate that may have accrued on it. Failure to do so may lead to you refunding the full amount of the security deposit to the tenant.

If you were meticulous in your approach and followed landlord-tenant laws correctly and as required by your state. The tenant may give up trying to recover their money.

If your claim isn't supported by evidence, it is as good as useless. Any evidence you have that can support the reason for which you withheld the tenant's security deposit will help strengthen your case. If your claim is predicated on an accusation of damages done to your property, then you should have some form of pictorial or video evidence to back up your claim. More so, a condition-checklist documenting the state of the apartment before the tenant moved in and after they moved out can come in handy. You might also want to provide an estimated cost implication needed for repairs.

If your claim is about unpaid rent, the tenant owes you, be sure to provide a certified letter, an email notice, a notice to pay rent or quit, evidence of eviction proceedings filed, or some form of correspondence sent to the tenant requesting this money. 

Sufficient evidence is an effective way of justifying your claim. Present it to your tenant, and hopefully, your tenant will give up on trying to recover their money. If the tenant is hell-bent on getting their money, they might sue you in a small claims court. 

It is possible for you to have every legal reason to withhold a tenant's security deposit, follow all state and local laws to the latter, and have sufficient evidence to substantiate your claim. With all these things done, your tenant may not be resentful in trying to recover their money in small claims court. However, it is at your discretion to decide whether to deal with the hassle of small claims court or to settle with your tenant for a sum of money.

Determining if small claims court is worth your time will depend on how much the tenant owes. If the tenant is contesting a paltry and ignorable sum of $100, you'll want to pass and save yourself the stress and waste of time. On second thought, it may be worthwhile to just give the tenant that $100 and move on. Howbeit, if you followed the law correctly and you think you deserve to keep that deposit, then you may be willing to see it through in court for as little as $50. Ultimately, you will have to evaluate the cost versus the benefit of going to court for a specific situation.