Renters Getting Screwed

Stiganator

Platinum Member
Oct 14, 2001
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http://www.msnbc.msn.com/id/27226273/


I can understand that a property owner might get forclosed on, but how in the world do these people lose their security deposits? They didn't breach the contract, the property owner did. Shouldn't they be able to sue the owner for their deposits?
 

Dr. Zaus

Lifer
Oct 16, 2008
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347
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Originally posted by: Stiganator
http://www.msnbc.msn.com/id/27226273/


I can understand that a property owner might get forclosed on, but how in the world do these people lose their security deposits? They didn't breach the contract, the property owner did. Shouldn't they be able to sue the owner for their deposits?

What makes you think they can't?

and when you figure it out, honestly think about why you thought that they couldn't.
 

Stiganator

Platinum Member
Oct 14, 2001
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If the owner can't pay them, the owner either needs to a) go to jail for grand larceny or b)work out a time frame in which to pay them with interest. Seems pretty cut and dry. These people weren't investors who take a risk on stocks going up or down. They purchased a service with a contract stating their deposit would be returned less any damages.
 

fallout man

Golden Member
Nov 20, 2007
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The laws where I live give renters lots of rights in the case of an owner being foreclosed. There was a thread about this same thing with regard to evictions.

If you rent, there are usually local laws that give you renter rights of due notice and recourse on stuff like security deposits.

Where I live, the security deposit is mandated by law to go into an escrow account, and the landlord needs to return the deposit plus the interest upon termination of contract. I do live in a highly rent-centric area (college town lol), however.

If people are losing their security deposits due to douchebag landlords, that is absolutely fucking criminal. What's the cut-off for grand larceny?
 

Thump553

Lifer
Jun 2, 2000
12,651
2,395
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I'm too lazy to look up the thread but that is what the issue of the Cook County (Chicago), IL sheriff refusing to have his office do evictions anymore.

Technically speaking in most states the mortgage has priority over the tenant's rights because it's on the land records first (or the tenants subordinate to it in their lease). Its a tough situation where the court has to balance the conflicting rights of injured innocent parties, the mortgage holder who wants to recover the value of its security ASAP and the tenant who paid his rent without any notice of the problem.

As a practical matter, these situations are usually worked out by negotiation. Generally speaking in a multifamily building (say 8 units or more) the property is worth more if it is occupied by tenants paying market rate rentals. The real problem is when the property is a one or two family-they are a lot easier to sell vacant.
 

Jhhnn

IN MEMORIAM
Nov 11, 1999
62,365
14,681
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Landlords who fail to pay their mortgage while collecting rents and holding deposits are basically guilty of theft by deception. They have to be at least 3 months behind on their payments before foreclosure can take place, and often considerably longer. It's not like they can't see it coming.

Yeh, sure, tenants can seek damages in civil court, even obtain judgement. Fat lot of good it'll do them given that the landlord is declaring bankruptcy, anyway.

Filing of criminal charges, even if they might not stick, would go a long way towards creating incentives for landlords to return damage deposits, establishing some justice for honest people who rent...

An honest landlord would compensate renters in some fashion before foreclosure actually occurred, also giving renters a heads-up at the same time.
 

nageov3t

Lifer
Feb 18, 2004
42,816
83
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security deposits are held in trust, so you should be able to sue...

my current landlord keeps my security deposit in a joint account with both of our names on it.
 

Atreus21

Lifer
Aug 21, 2007
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572
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Originally posted by: Stiganator
http://www.msnbc.msn.com/id/27226273/


I can understand that a property owner might get forclosed on, but how in the world do these people lose their security deposits? They didn't breach the contract, the property owner did. Shouldn't they be able to sue the owner for their deposits?

Security deposits are usually governed at the state level.

I'm a landlord in New Orleans. State law is heavily, and I believe justifiably, weighted in favor of the lessee, or tenant.

A security deposit in Louisiana is to be used only to repair damage beyond normal wear and tear. And if it is used as such, the lessor has to provide documentation of the damage, and receipts of the repair. It cannot be seized in the event the lessee fails to pay rent, or for any other reason.

In short, a lessor's ONLY recompense in the event of non-payment is prompt eviction, so as to occupy with a new lessee as soon as possible.

Because of this, the lessor has to be able to depend on evictions. It's really they're only way out of a bad tenant.