April 01, 2015

Troops Ripped Off: Landlord/Tenant Issues

Michael S. Archer
From Ripped Off: A Servicemember's Guide to Common Scams, Frauds, and Bad Deals, Chapter 6

Troops generally do not stay in one place for very long. They hop from duty station to duty station, picking up and moving whenever ordered to go. It is part of the service and sacrifice of wearing the uniform.

The early portion of a service member’s career, when he or she is especially young, inexperienced, and vulnerable, is particularly prone to frequent moves: first to attend initial training and then follow-on training in a specific military specialty. In my career, I was first assigned to Quantico, Virginia, for ten weeks of Officer Candidate School (OCS) followed by six months of The Basic School (TBS) officer training. Next came two months at the Naval Justice School (NJS) in Newport, Rhode Island, followed by my first nontraining duty station in California. Two years after that, I was overseas. One year later, I was living at Marine Corps Air Station, Yuma, Arizona. Many enlisted troops experience far greater turmoil, especially since our post–9-11 military engagements. Here is a typical Marine scenario these days: The troop starts with recruit training in Parris Island, South Carolina, for twelve weeks, and is then on to the School of Infantry at Camp Lejeune, North Carolina, or Camp Pendleton, California, but only for a month or so for those who are not infantry specialists. Next comes follow-on training for his or her military specialty, which lasts four months or so. Then assignment to the first duty station, with deployment likely soon thereafter. That comes to five moves in about a year. Many of the “residences” will be barracks or open squad bays in this early period, especially if the service member remains unmarried. But there is constant moving and great potential to be subjected to landlord or property-manager abuse.

The remainder of the service member’s career will be marked by a cycle of duty-station moves generally every two or three years, punctuated by less predictable moves for deployment, overseas tours, military schools, and advanced training.

On some installations, a military family may have to get on a waiting list for base housing. Unless the service member reaches the top of the list at precisely the same time as the lease runs out, he or she has a decision to make. Option 1: Vacate the off-base premises before the end of the lease period. This option runs the risk of getting stuck with paying an amount equal to the rent through the end of the lease period if the landlord cannot find a replacement tenant. Option 2: Stay in the rented premises and give up the opportunity to live on the installation and enjoy all its services and amenities, including avoidance of the morning and evening crush of traffic coming onto or exiting the base.

With all this moving around, troops rent from several landlords and then depart, often before the expiration of the lease term. This constant departure from rented premises results in the most common of all the landlord/tenant issues: landlord withholding of the security deposit and  dditional landlord claims for alleged nonpayment of rent and/or damage to the premises.

Security-Deposit Issues

The wrongful withholding of a security deposit is such an easy rip-off that it is just too hard for some landlords to resist. They already have the tenant’s money, and there are generally no penalties for keeping it illegally. From the landlord’s perspective, the worst that happens is that the tenant sues and recovers all or some of the deposit. Thus, even when the landlord loses in court, he or she is generally no worse off financially then if he or she had followed the law in the first place. Chances are pretty good that most tenants are not going to stay around to sue the landlord anyway; they have things to do, like move the family across the country or across the world pursuant to military orders.

So, what is to be done about the wrongful withholding of a security deposit?

Before Move-In

There are several things prospective tenants should check even before moving into the premises. Make sure that there is a written lease, that it clearly states the duration of the tenancy, and that it identifies the amount of the security deposit. Many states will have a limit on the amount of the security deposit. For example, North Carolina security deposits may be equal to one-and-a-half months’ rent if the lease is a month-to-month lease or two months’ rent for terms longer than a month.1 In addition, the landlord can charge a “reasonable” nonrefundable pet deposit.2 Some landlords attempt to charge, in addition to the security deposit, a “cleaning fee,” which seems to me to be an unlawful means of charging a security deposit in excess of that authorized by law. In any event, be especially wary of such additional move-in fees.

Virginia allows a security deposit equal to two months’ rent, which can apply to unpaid rent, late fees, damages beyond ordinary wear and tear, and other charges agreed to in the lease. The Virginia landlord has forty-five days to refund the full deposit or provide a written accounting of the charges against the deposit.3

Ensure that you make a very careful inspection of the premises before you move in. Have another person present. Ideally, you can make a video or photographic recording of the condition of the premises at the time of your move-in. Note every little carpet stain, nail hole, crack in a wall or window, or defect of any kind. Turn in your list of defects to the landlord and make sure that you have a copy. The tenant is responsible for any damage he or she causes to the premises (beyond ordinary wear and tear) but is not responsible for repairing damage already existing at the time of move-in. Thus, it is critically important to document the condition of the premises at move-in. Many landlords will have a move-in checklist to assist in this recording. Have the landlord or his or her agent sign it and make sure that you keep a copy. Even if there is no move-in checklist, even if the lease says nothing about a move-in inspection, conduct your own detailed inspection and record your results. If you can, have the landlord or his or her agent sign the record of deficiencies. If the landlord promises to fix some defect, get a date certain for the completion and get those promises in writing. If the defect is significant, do not sign the lease until the repairs are made.

Prospective tenants should also ensure that the supposed landlord actually owns the property he or she proposes to rent. Fraudsters sometimes post Internet ads listing properties they do not own and will ask for advance rent and a security deposit before move-in. Some installations have a housing referral office and may be able to make available a neutral third party to attend move-in and move-out inspections. If the property manager participates in any special programs sponsored by the installation, third-party inspection witnessing is more likely.

Moving Out

Just as when you moved in, make a careful inspection of the condition of the premises when you move out. Unscrupulous landlords may inspect with you, tell you everything is fine, and then steal your security deposit anyway, claiming all sorts of damage. Have a neutral third party  articipate in a move-out inspection. Better yet, create a videotape record of the condition of the premises upon move-out.

Know the Rules

Security-deposit withholding overview. State statutes concerning security deposits are generally not that complicated. The statutes will list the matters that the landlord can charge against the security deposit, most important among them being damage to the premises, unpaid rent, and some costs associated with re-renting the premises if the tenant vacates before the expiration of the rental period. The landlord will be provided with a specified period of time, normally thirty days, either to return the security deposit to the tenant or, if the entire security deposit is not returned, to provide an itemized list of charges to the tenant indicating why the entire security deposit was not returned. Unfortunately, typical state statutes do not prescribe any penalty to landlords who fail to provide such an itemized list of damages and their amount, nor is the tenant entitled to interest that may accrue on the deposit.

Damage versus ordinary wear and tear. Tenants are not responsible to pay for every bit of deterioration that occurred on the premises while they lived there. The tenant is responsible for “damage” but not for “ordinary wear and tear.” If, for example, a tenant causes a large rip in the carpet, that is damage. If the carpet is worn down from use or the pipes are rusty, that is ordinary wear and tear. Far too many landlords attempt to stick the tenant with the cost of new carpeting or flooring every time they want to replace old, worn carpets or floors. In fact, it is amazing how frequently floor coverings are the focus of security-deposit disputes. In practice, the distinction between “ordinary wear and tear” and “damage” is not always easy to make.

Sometimes the question is not the fact of damage but a reasonable cost to repair it. For example, the parties may agree that the linoleum has a hole in it, or that the carpet is torn, or that there is a stain on the wood floor. However, landlords often claim that the damaged portion cannot be repaired and that the entire floor covering must be replaced. Consultation with an expert in floor repair/installation may be needed to find out the truth of the matter. Sometimes, the circumstances are such that the entire flooring really does need replacement. Sometimes, the landlord just wants to buy new linoleum, carpet, or other floor covering on the tenant’s dime.

The North Carolina Tenant Security Deposit Act. The North Carolina Tenant Security Deposit Act4 addresses all security-deposit issues. It designates the maximum amount of the security deposit as one-and-a-half months’ rent for a month-to-month tenancy and two months’ rent if  he lease is for a longer period of time.5 As a practical matter, landlords often choose to charge a month’s rent as the security deposit. The landlord can keep all or a portion of the security deposit, but only as needed to offset the tenant’s nonpayment of rent or utilities, physical damage  of the premises, any unpaid bill that has become a lien against the property (for example, failure to pay the electric bill if required to do so), costs of re-renting the premises (such as advertising) if the tenant moves out before the end of the lease, and the cost of removal and storage of property the tenant leaves after breaching the lease or eviction.6 The landlord is required to return the deposit to the tenant within thirty days after termination of the tenancy or provide an itemized list of charges against the security deposit. If the extent of the landlord’s claim against the deposit cannot be determined within thirty days, the landlord is obligated to give an interim accounting at the thirty-day mark and a final accounting within sixty days of the termination of the tenancy. Further, the act specifically prohibits the landlord from withholding any portion of the security deposit for ordinary wear and tear and also prohibits him or her from withholding any portion of the security deposit exceeding actual damages.9 For example, if a new tenant moves in a week after the old tenant moves out, the landlord can only charge a week’s rent against the deposit for unpaid rent.7 A landlord who willfully fails to comply with these accounting rules and deadlines forfeits his or her right to any portion of the security deposit.8

Endnotes

1. N.C. Gen. Stat. § 42-51.

2. N.C. Gen. Stat. § 42-53.

3. Va. Code Annotated § 55-248-15:1.

4. North Carolina Security Deposit Act, N.C. Gen. Stat. § 42-50–55.

5. N.C. Gen. Stat. § 42-51.

6. N.C. Gen. Stat. § 42-51(a).

7. N.C. Gen. Stat. § 42-52.

8. N.C. Gen. Stat. § 42-55.

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Michael S. Archer

Michael S. Archer is a retired Judge Advocate of the U.S. Marine Corps, currently serving as the legal assistance director for Marine Corps Installations East. He has been awarded the Distinguished Service Award for military legal assistance by the North Carolina State Bar (2006) and the American Bar Association (2012).