Residential Rentals are HOT – Part II – Rent and Security Deposits
This article will discuss the payment of rent and security deposits. Rent can be a defined term in any agreement, meaning it may constitute more than just the monthly payment for occupancy. For example, a lease agreement might provide that “Rent” constitutes both the monthly occupancy payment as well as payment for utilities, such as water, sewer, refuse, electric, gas, etc. Alternatively the rent may be limited to only the monthly occupancy obligation with the obligation to pay utilities being separate from rent. Only the person or persons identified in the lease as the “Tenant” are obligated to pay rent. Consequently, if there are multiple occupants (such as students or other co-habitants), those from which the landlord wants to collect rent should be identified as a tenant in the lease. Put another way, if a co-habitant is not listed as a tenant, the landlord cannot collect rent from that co-habitant. Others the landlord can compel the payment of rent would be any guarantor of the lease, the tenant’s estate or any assignee of the lease.
From the tenant perspective, only the person or entity identified in the lease or the person or entity that owns the property at the time the rental obligation arises, is entitled to the receipt of rent. If a tenant receives notice to remit payment to a new person or entity, the tenant should verify with the former landlord any assignment of rents to a new landlord. An assignment may occur with a change in a management company or the sale of the property to a new owner.
The time and place of payment of rent should be identified in the rental agreement. If it is not identified in the lease, technically the landlord has a duty to go to the property and collect the rent from the tenant. The landlord may accept late or partial payments of rent, at the landlord’s discretion. Keep in mind however that late or partial rent payments may be grounds to initiate the eviction process. The mailing of a rent payment is not sufficient unless permitted by the landlord. Rent may be paid in personal property or through tenant’s labor. Last, the landlord may require a money order after a dishonored check.
Rent should not be confused with a security deposit. A security deposit is the deposit of any money or property to secure tenant’s performance under the terms of the rental agreement. If the security deposit is in excess of one month’s rent, it must bear interest. For example, a security deposit that consists of first and last month’s rent would have to bear interest. A pet fee is a fee and does not constitute a security deposit but a pet deposit would. Upon termination of the tenancy, the tenant must provide the landlord with a forwarding address. Within 30 days of move out, the landlord must provide the tenant with an itemized written accounting of the security deposit (including any amounts withheld for unpaid rent or repairs) and return the balance due the tenant. If a court determines that the landlord has wrongfully withheld any portion of the security deposit, the court may order damages equal to two times the amount wrongfully withheld and attorney’s fees.