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jreenan · May 1, 2007, 11:19 AM

We own a house in CO. A tenant signed a 1 year lease. He gave us 30 days notice that he was going to break the lease 3 months early. He lost his job, girlfriend... etc... We told him we were going to keep the security deposit for breaking the lease early, but not hold him to the terms of the lease.

He was scheduled to move out on April 30. Since we were given 30 days notice, we were able to find tenants to move in on May 1. However, we still kept the security deposit from the original tenant because he broke the lease early.

The tenant hasn't complained (I think he feels fortunate that we let him out of the lease) but it occurred to me that this might not be legal. We had to pay some expenses for the turnover such as carpet cleaning, advertising and general maintenance to move a new tenant. These are expenses we wouldn't have incurred for another 3 months had he kept the lease.

Does anyone have any insight?

ScottGem · May 1, 2007, 11:25 AM

Generally, it is legal to keep the security deposit for unpaid rental. I wouldn't worry about it.

landlord advocate · May 2, 2007, 06:52 PM

Originally Posted by jreenan

We own a house in CO. A tenant signed a 1 year lease. He gave us 30 days notice that he was going to break the lease 3 months early. He lost his job, girlfriend...etc... We told him we were going to keep the security deposit for breaking the lease early, but not hold him to the terms of the lease.

He was scheduled to move out on April 30. Since we were given 30 days notice, we were able to find tenants to move in on May 1. However, we still kept the security deposit from the original tenant because he broke the lease early.

The tenant hasn't complained (I think he feels fortunate that we let him out of the lease) but it occurred to me that this might not be legal. We had to pay some expenses for the turnover such as carpet cleaning, advertising and general maintenance to move a new tenant. These are expenses we wouldn't have incurred for another 3 months had he kept the lease.

Does anyone have any insight?

A security deposit is money that is held by the landlord to secure that the tenant pays the rent and to cover any damages done by the tenant. Your tenant was responsible to pay the rent even if he left early, unless you re-rented the property. You can not expect two different tenants to pay rent for the same property. In your case, the costs you incurred to re-rent the property (advertising, credit check, utilities, cost to re-paint or clean the carpeting etc.) should be deducted from the security deposit. If any money is left, it should be returned to the former tenant. In many states, if the landlord does not either return the security deposit or send written notice as to how the security deposit was used, the tenant can file a small claims case for twice the amount of the full security deposit. That's one case the tenant usually wins.

excon · May 2, 2007, 09:43 PM

Hello jr:

The law says that you must mitigate your tenants damages, not profit from them. This was not an opportunity to make money even though the tenant isn't complaining about it. Send him the balance after your expenses.

excon

PS> Good for you for considering your actions. Most landlords would just pocket the money and not give it a second thought.