San Diego Housing Bubble News and Analysis

I am not sure of the legal ramifications, since you do have a contract w/them and the contract requires you to pay rent. They can come after you for rent and any damages suffered b/c you didn't pay the rent. You lawyer friend would know better.

On principle and intuition, I'd want to tell them to apply the deposit, especially since you've taken such good care of the place and unlikely you'll get the deposit back, as you suspect and you'd end up going to small claims, get a judgement and maybe still not collect.

Lawyer friend lives in a $4 million house and has exceedingly high principles. One of the reasons I love her.

I'm not saying that I don't have principles - I'm just annoyed that we have taken such great care of this place and, from what I know of their financial situation, I doubt they will return our deposit.

They SHOULD have our deposit in an interest-bearing account - so they SHOULD have the money. But, contractually, I know it's a different story...

Almost every rental I have lived in the landlord has just applied my security deposit to last month's rent.

No harm in asking them to do that.

I do not feel an ethical issue here at all.

I guess if they get huffy about it, it means they dont have the money to return.

Thanks, Enorah.

I agree with Enorah and I agree with your instincts. Based on the facts of their financial situation if they lose everything, you stand a very good chance of not getting your deposit back. Even if you prevailed in small claims court, you might not see all the money.

Exactly. And with a busy job, fixer-upper house, etc. I dont feel like adding small claims court to my To Do list.

I'm planning on calling them in late July to let them know that we're moving and to apply the sec deposit to last month's rent.

In a "normal" situation I would not do this. When I've rented in the past, I've always been a great tenant.

But the foreclosure situation is not normal....

These are not normal times and I guess they can always turn around and take you to court, if they feel they have been wronged. With your record of great upkeep and paying to maintain the house, I think you should be in good shape. Keep your receipts and make some kind of video recording of the shape you are leaving the house, just to document the condition you left it in. For the record, I am not an attorney and I would like some of them to weigh in on this discussion.

1. Tell them that you're using the deposit as last months rent and why.
2.Take plenty of pictures and a video of every square inch of the property after you've moved your furniture out and cleaned the place and let the landlord know that you did this.

If they are stupid enough to sue you in small claims court and the place is in great shape, what grounds do they have for winning a lawsuit since the deposit must be returned to you anyway as long as the property is in normal, wear & tear condition?

My two cents.

Yep, apply the deposit. They can do an inspection before, to make sure nothing has been destroyed.

I'm no expert in landlord/tenant law. When in August are you planning on vacating the rental? As I understand it, if you don't pay rent in August when it's due they can:

1. Serve you with a 3 day notice to vacate (or pay the rent). Now the clock is running (if you're still there).
2. If you're still there and don't leave or pay within 3 days, the Landlord can file an unlawful detainer lawsuit.
3. Once filed it can be served on you. Once you're served you typically have 5 days to file an answer.
4. Trial dates are usually scheduled within a short time frame given the nature of the relief being demanded (possession).

So, if you plan on being out of there within the first week of August then there's no point in seeking to have you evicted - not to say the couldn't, tho. Now they would only need to go after you for monetary damages, i.e. lost rental income.

What the other posters advised is spot on. IF you get sued for August's rent payment, you may still be entitled to your $2300 deposit back, less any legitimate deductions for cleaning/repairs. If you have receipts, videos, etc. showing you left it in the condition it would have been had the Landlord done a reasonable job themselves, then theoretically you could be entitled to your entire deposit back. If that's the case, the Landlord just waisted their time by suing you for one month's worth of rent when they are likewise obligated to return your entire deposit.

In any event, these are mere ramblings of something I know absolutely nothing about, but rather just looked it up on this site:
http://www.dca.ca.gov/publications/landl...

Good luck!

pabloesqobar

I agree with jpinpb, it seems to make sense to let them know that you plan on having them apply your security deposit to the last months rent. It seems that in the case open communication with your landlord would be the best approach - they have already opened up with you about the possibility of defaulting on the loan. You may also want to document all the maintence and costs associated that you have done to keep the property in good condition.
Congratulations on your new home, you must be excited!

BobS
I'd fully advise them of your plan to apply the deposit on the last day of the grace period to pay rent--usually 5 days. Try to get their acquiescence, be friendly & reasonable, showing them how they will be protected. IF they then chose to give a 3-day notice, then the clock starts ticking. Your goal is to keep pushing the date back until it becomes moot.
They have to SERVE you with the notice, which may take a few days (get the proper form, fill it out perfectly, serve it in person). Then there is, I believe, 3 weeks minimum after they file an unlawful detainer which cannot start until after the end of the 3-day notice period, weekends and holidays not counted. This should put you easily into September. Besides, you can further delay the court date by ANSWERING the complaint on the form you are served on. This gives many more days.
IF you show up in court with all your evidence, you should prevail, but will most likely not be necessary.

Thanks, everyone.

I am looking forward to getting settled into our new place. As I said, it's a fixer, and there is a LOT of work to do before we actually move in.

The owners of our rental have been very nice and friendly. However, once our rent check stops showing up every month, things could turn fast. These truly are desperate times.

I hadnt even thought about making an "exit video". I remember a friend did that years ago and actually held up that day's newspaper to prove the date.

We plan to leave this place cleaner than we found it. When we moved in, the oven was filthy and caked in grease, and the backyard was weedy. We've been spending about $130/mo on gardening and pool services and have barely bothered the owners with anything. My husband is pretty handy and just takes care of the minor stuff.

Hopefully, I'm worrying over nothing. Thanks for your feedback!

Thanks, BobS.

We plan to move into the new place by the weekend of August 1st. Hopefully, it will be a non-issue. I honestly cant imagine that they would bother to go through all of the trouble of serving, court, etc. when, in all likelihood, they are going to default anyway.

I'll just keep my fingers crossed that we can make our new place livable by then....

Like others have said, I'd discuss your idea with them up front and gauge their reaction. Their reaction will vary depending on whether they were planning on giving you back the deposit all along or planning on stiffing you.

Personally if I were the owner, I wouldn't agree to it unless I've seen the place first hand. If I saw that you had taken care of the house like you say you have, I'd have no problem with it.

Lots of common sense answers, none of which substitute for the law.

The below is not legal advice, but you may want to get some.

A "security deposit" is not last months rent.

Assuming that you have a standard rental agreement,If you don't pay by a certain date, you incur a late charge.

Upon vacating, landlord has 21 days to provide you with an itemized list of expenses/costs, which CAN include any unpaid rent + late charges, abnormal wear & tear etc.
If that is not provided(postmarked) timely, you can sue them for return of the entire deposit, and they can countersue you for back rent + late fees +

Discussing this with them in advance may OR may not work to your advantage. ALL agreements should be in writing.
SC judges hate the verbal he said/she said.

Providing a WRITTEN 30 day notice is a completely separate event from paying or not paying your rent.

To address an original comment, I don't think that there is any requirement in CA to escrow a security deposit nor pay any interest on it to the tenant.

Most tenants and landlords haven't got a clue what the laws actually are and it's only when one party hires an attorney or actually reads their rights.

Usually it's two "ignorant of the law" parties arguing over common sense.

Either take your chances and hope that your LL is clueless
OR
get some legal advice about how to protect your deposit correctly

Good Luck,, post an update when all is said and done~

Thanks, HLS!

I am about 95% certain that we won't get the deposit back. The owners of our rental are in deep doo-doo, and I think financial desperation leads people to o things they normally wouldn't.

This house (our rental) was already in default once - a few months before we moved in. I actually called Riverside County after the owners asked us about doing a short sale 2 mos ago.

I was concerned about being kicked out of the house, and explained the sitch to the woman from the county. She said, "if you give me the Parcel Number, I'll tell you what's going on."

The nice woman from the county told me that the house had already been in default once. Just before we moved in, last year. It makes me wonder if our security deposit/1st month's rent were used to get the house out of the hole?

Ordinarily, I would be a superb tenant and play by the rules but, in this case I think taking "the high road" will be a one way ticket to YoureScrewedVille.

Yes, I will let you all know what happens.

Oh, the drama!!!!

DHARMA,
I don't blame you for not wanting to pay, and the late charge may become a moot point.

Perhaps you can get them to agree IN WRITING to whatever terms you want, just so you are covered...

The law is a funny things. Criminals sue victims and win.
Lawyers make money..

Here is a (crazy) list, state by state of how long a landlord has to return a security deposit or account for it.
Seems silly that it isn't uniform..

http://www.nolo.com/article.cfm/ObjectID...

Next, poke around here and see what you can determine for your situation...perhaps the expense of a book is worth it to you or maybe you can find one cheaper online.

For anyone in a similar situation, always get the most current editions, laws do change !
http://www.nolo.com/resource.cfm/catid/3...

KNOW YOUR RIGHTS ;-)

PS: Once a house IS foreclosed on, your "landlord" has some new problems if you have a lease with them..

See the "new foreclosure scam ?" in the current forum topics for details..

Dharma, if I were you, as soon as they go into default, I'd make July my last payment. You're worried about ethics? Is it ethical for them to stop paying the mortgage on the house while you are paying them rent?

If they go into default, you can't count on getting your deposit back. You are doing nothing wrong. If they go into default, that is proof they have stopped making payments on the house you are renting. Unless you have $2300 to throw away, don't let them screw you. Screw them first. Don't waste your time in small claims court, for all you know these people may skip town.

What are ethics?

:)

 ---

Talk to the landlord about you wanting to apply security to last month rent. Tell them you want to do a walkthrough beforehand 1 week before.

Before leaving, make sure you take ample pictures of the condition you left the house in when you left.

Given the state of the landlord, I wouldn't be surprised of the house ends up trashed, and you don't want the finger point to you.

selfportrait

----- Sour grapes for everyone!

Dharma, I'm betting Flu's right. When the bank gets the house, it'll be minus kitchen cabinet doors, all the appliances, etc.

Having been through the whole small claims court drama to get a deposit back, I can attest to the importance of lots of pictures/video. Also, keep track of ALL receipts for repairs/maintenance, etc. Get everything in writing, and document every phone call, etc.

What we do now is video & photo BEFORE we move in, and video & photo of the same stuff after we've moved out. That way, you can show what was pre-existing (good and bad, as many tenants actually improve the property, like you did). Use a picture/video of that day's newspaper to show the date (as mentioned above).

Good luck!!

dharmagirl- I'm no expert on this, but what does your lease agreement say? For instance, I have seen lease agreements that say the security deposit is not to be used in lieu of last month's rent, but also says the deposit can be used to "cure" lack of or late rent payments. Also, what is your penalty/late fee? If its say $25 or $50, then what do you have to lose by not paying your rent? Yes, they can take you to small claims court, but again, if your rental agreement says the security deposit can be used to cure any rental payments, I don't see what your real risk is?

That said, I'm not suggesting you do anything "illegal". These are yours and the landlords rights under CA law:
http://www.dca.ca.gov/publications/landl...

Golfgal and HLS have made the most pertinent posts on here. In general most lease agreements do not permit your security deposit to be used to pay rent, first months, last months or otherwise. Using the security deposit in lieu of rent is permitted but does not absolve you of late fees or penalties. Similarly if the landlord has documentation or invoices proving that things need to be fixed then he can come after you for those liabilities. Again it all depends on the terminology of your lease agreement.

My only advice here would be to review your lease to the letter. If you plan on violating it in any way then I would suggest you consult an attorney prior to doing so. Your dilema is not an ethical one it all, it is very simply a matter of you choosing to violate the contract. If you pay your lease but do not get the security deposit back then you simply go to court to fight for it. If you choose not to pay rent then that is okay to. Whatever consequences follow from that will be up to the landlord and what the lease allows for with regards to penalties, late fees, etc and if the landlord has the energy to bring you to court.

This is not advice in any manner so please don't construe it as such. Consult an attorney

SD Realtor

Thanks again for all of the terrific comments.

The owners are not unreasonable - I just think they're hanging on to their HELOC-funded empire by their fingernails.

I'm comfortable with letting them know - by June 30th - that we plan to be out of the rental by August 2nd and want to use our deposit as last month's rent. I'll offer to let them come by and do an inspection after we've moved out.

If they feel that repairs are needed, and we agree, we'll arange to make repairs. This seems perfectly reasonable to me.

I truly believe they would only freak out over this if they had no intention of returning the deposit in the first place. Because they'd be missing out on an easy $2300.

As I've said in other posts, the owners are nice people when financial bankruptcy often leads to moral bankruptcy in the name of "survival."

I will also look over our lease and see what it says. It was a boiler plate document.

Thanks!

I think when it comes to financial related matter, "reason" shouldn't be the bar for determining the outcome. "Reasonable" is highly subjective. If I were you, I would do what the tenants rights site suggests, which is schedule a walk through "before" you move out and the owner has to present you with a list of things they want fixed. This way, you can "fix" the simple things and the list goes through things that are considered normal wear and tear. I'd suggest you print this list out - don't assume your owner knows the rules. This is from the website I included earlier- here's the link to the specific page. Put everything in writing as others have suggested.

http://www.dca.ca.gov/publications/landl...

Initial Inspection Before Tenant Moves Out
A tenant may ask the landlord to inspect the rental unit before the tenancy ends to identify defects or conditions that justify deductions from the tenant's security deposit. The purpose of this "initial inspection" is to give the tenant an opportunity to repair the defects or do the cleaning identified during the inspection in order to avoid deductions from the tenant's security deposit. The tenant has the right to be present during the inspection.

The landlord must perform an initial inspection as described in this sidebar if the tenant requests it, but cannot make an initial inspection unless the tenant requests it. However, the landlord is not required to perform an initial inspection if the landlord has served the tenant with a three-day notice (an eviction notice) for one of the reasons specified in footnote 204.204

Landlord's notice

The landlord must give the tenant written notice of the tenant's right to request an initial inspection of the rental and to be present during the inspection. The landlord must give this notice to the tenant a "reasonable time" after either the landlord or the tenant has given the other written notice of intent to terminate (end) the tenancy (see Moving Out). If the tenant has a lease, the landlord must give the tenant this notice a "reasonable time" before the lease ends. If the tenant does not request an initial inspection, the landlord does not have any other duties with respect to the initial inspection.205