Tenants Seek End to Security Deposits

by Chris on December 6, 2010

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.

{ 2 comments… read them below or add one }

chris powell December 7, 2010 at 8:23 am

In this article, the statement is made that the tenant is unhappy that

“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.”

Since this also applied to landlords who are wronged by tenants, how could justice be served by changing the law such that landlords would have no recourse. As it stands now, as hard as landlords may sometimes be to track down, tenants are even harder to track down because once they move out there is no longer any valid address that can be used as a starting point in finding them.

I am not against abolishing security deposits, but on the flip side, tenants that skip out on rent or damage property without compensating the landlord should be deemed to have committed a criminal offense and subject to conviction and penalties similar to those for theft and/or vandalism, with repeat offenders subject to more harsh penalties up to and including jail time. This would create a more balanced state of affairs.

Marv December 7, 2010 at 10:15 am

Chris I agree with your comments and your assessment on what should happen to tenants that skip out on rent. You and I and most Readers here know that there isn’t a snow balls hope in the hot place that criminal charges will ever be laid against a tenant for skipping out on rent. Why? Several reasonsons 1.) The court system would be overwhelmed with this type of occurence. 2.) The police don’t have the resources to investigate million dollar frauds, they certainly would not entertain investigating skipped rent 3.) Criminal intent is difficult to prove in an instance like this and evidence of similar fact evidence ( ripping off multiple landlords) would have to be gathered. And since 99% of landlords never do anything (report pay habits) about tenants that skip out on rent, there is now way to track that. TVS gives landlords and property managers an opportunity to report tenant pay habits at no cost, if every landlord and property manager reported tenant pay habits, there would be far fewer tenants skipping rent. My point here is simple…landlrods and property managers should report tenant pay habits thus minimizing the risk of skipped tenants. I know that we could go on here making various arguments, but the fact remains that there is no consequence for “high risk” tenants that use landlords as a revolving line of credit. Reporting tenant pay habits so that other landlords might know who not to rent or vice versa, to seems to be a pretty simple solution.

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