Tenants Seek End to Security Deposits

by | Dec 6, 2010 | Rental Property Management Tips

A tenant in Nova Scotia became so distraught over deductions from her security deposit that she told her tale to a news reporter. According to the reports, she is calling for new laws that require landlords to place tenant deposits with a third party.

A local tenant advocate weighed in on the issue, suggesting the better approach would be to abolish security deposits altogether.

At issue is about $500 held by the landlord as a security deposit. He told the tenant that he was withholding all of the monies because he had to repaint and repair damage to the rental property. She’s disputing that the landlord can charge her for repainting.

To file a claim against the landlord with the local tenancies board, the tenant will have to pay a filing fee and an additional fee to have papers served, expenses she claims are grossly unfair when she’s done nothing wrong. She claims the landlord is avoiding her. If she can’t serve the papers, she can’t have a hearing.

The case has generated allegations that landlords frequently mishandle tenant deposits, with one tenant advocate claiming that landlords’ actions amount to stealing.  

However, in the provinces that do allow security deposits, strict rules are already in place regarding the application and return of tenant funds. Landlords often must calculate and pay interest. Deductions must be based on actual costs for repair of damages, and landlords cannot deduct for items considered normal wear and tear – the things that happen naturally over time when a rental property is lived in.

If this case goes to a hearing in Nova Scotia, a Residential Tenancy Officer will look at whether re-painting the walls is an item of damage or normal wear and tear to determine if the deduction was appropriate.

In previous cases, officers have denied landlords’ deductions:

A landlord lost $2,080 of his total claim because he could not produce evidence that he conducted a move-in inspection, and therefore there was no starting point to determine the condition of the property before the tenant took it over. Based on photos the landlord presented of trash left behind when the tenant moved out, the officer did allow $100 for clean up and garbage removal.

In another situation, a landlord claimed the carpeting in the property was dirty, and had to be treated for fleas. He presented an estimate of the cost of replacing the carpeting. The hearing officer noted that replacement of the carpeting was not allowed, first, because this is an example of wear and tear, especially because the carpeting was already 8 years old. But the officer also pointed out that the amount was an estimate, and a deduction can only be taken for actual expenses. However, where the tenant had torn some of the wallpaper, and the landlord patched up the paper and then repainted the wall, the officer did allow a deduction for those expenses, in large part because the landlord did make the repair, and could document the actual amount.

Often, landlords don’t have much time to make the required repairs before they have to account for the damage deposit – as little as 10 days in some cases.

Service Alberta suggests estimating deductions and returning any undisputed portion within the time required.

Taking unauthorized deductions is risky business, especially in British Columbia, where a landlord can be ordered to pay double the amount as a penalty.

To avoid problems with security deposit deductions, consider the following:

Choose repair service providers carefully. Look for preferred vendors in your local apartment association. Often, these providers will offer discounts.
Conduct Move-In Inspections.
Document damage with photos or video.
Only deduct for actual repairs that you intend to complete.
Return any undisputed portion to reduce the likelihood of legal action.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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