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Winning a Security Deposit Lawsuit

Landlords and property managers collect security deposits so that they may have a safety net if a tenant damages property or does not pay rent. However, as a landlord even if you follow your state and local laws related to security deposits perfectly and only keep security deposit money that you are legally entitled to, your tenant may sue you in small claims court to get the money back. If you have already taken all or a portion of the security deposit it is likely this tenant has already caused either damage to your rental unit or failed to pay rent, and the last thing you want to do is go to court and end up paying the tenant back their security deposit plus damages the court may award them. Therefore, it is important that you follow the guidelines below which will help you win a security deposit lawsuit if one is brought against you. It is always a good idea to consult with a lawyer when you are involved in any legal matter including a small claims court lawsuit.

  • According to NOLO in many states, a tenant must first send a landlord a demand letter where the tenant demands that the landlord refund the security deposit before the tenant can sue the landlord.

  • A landlord’s best option is always to stay out of court so if the landlord can compromise with a tenant or use a mediation service to settle out of court. If a compromise or settlement is not reached a tenant can have one or more years in many states to sue the landlord for the security deposit.

  • If the landlord does get sued by his or her former tenant, the landlord has to prepare for the small claims court. Understanding your state's security deposit rules and showing that you followed them will be essential to winning the case. You will also need documents like your signed lease agreement, copies of damage reports and correspondence between you and your tenant to bring to the small claims court to support your case.

As a busy landlord or property manager, the prospect of having to go to court over a security deposit can be daunting and frustrating. The situation may seem even more intimating if you fail to have a property management system that helps you track or organize related documents that can help you win the lawsuit. The cost of an effective building management software program is nowhere near the value of that management property software if it enables you to easily defend the management decisions you have made such as keeping part or all of a tenant’s security deposit.

This post is provided by RISSOFT Residential and Commercial Property Management Software, specializing in innovative and cutting-edge property management software for all 50 states. Request a demo or contact us today to receive more information.

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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