As a property manager, I maintain a trust account for tenants’ security deposits. The landlord terminated our management agreement effective today, and a tenant in the property notified me that he wouldn’t be renewing his lease when it expires next month. The landlord hasn’t retained a new property manager. What should I do with the tenant’s security deposit?
You should do two things in this situation:
- Forward the security deposit to the landlord and remind him that he has a duty to account for the deposit when the tenant vacates the property.
- Send written notice to the tenant advising him that you are no longer the agent for the landlord; you tendered the security deposit to the landlord; and the landlord is responsible to account to him for the security deposit.
You can use TAR form 2210, Notice to Tenant of Change in Management and Accountability for Security Deposit, to notify the tenant of the situation.
If you and the landlord instead agree that you will continue to hold the money and account for the security deposit, such an arrangement should be stated in writing and specifically outline all parties’ responsibilities, such as who will inspect the property for damage upon the tenant’s departure and who will make determinations about any deductions.
IF I AM A LISTING AGENT AND THE LANDLORD WILL BE MANAGING THE PROPERTY, WOULD THAT SECURITY DEPOSIT BE MADE PAYABLE TO THE LANDLORD AT THE BEGINNING OF THE TRANSACTION, OR SHOULD THE SECURITY DEPOSIT GO THROUGH THE BROKERAGE, WITH THE BROKERAGE MAKE PAYMENT TO THE LANDLORD OF THE SECURITY AND THE FIRST MONTHS RENT?