Landlord-Tenant Articles

Security Deposits not a "Kickback" to Landlords

The Security Deposit is a sore subject among tenants. The amount of the deposit may seem arbitrary, or too high. Tenants often worry about getting their deposit back at the end of their lease, especially if previous landlords have taken out deductions. Although landlords decide the amount of the deposit, the amount taken out at the end is not arbitrary, and there are several steps a tenant can take to protect him or herself from getting burned.

The first step is to understand what landlords are required to do with the deposits they collect. According to Oklahoma Statute, “Any damage or security deposit required by a landlord of a tenant must be kept in an escrow account for the tenant.” (41 O.S. Sec. 115(A)) Contrary to popular belief, it is absolutely illegal for landlords to prematurely spend a security deposit or even to intermingle the security deposit with their disposable income. The deposit sits in an escrow account, until the lease is terminated. The tenant does not have any right to collect any interest accruing in the escrow account. This interest may be retained by the landlord in consideration for maintaining the account.

The remedies provided to tenants for misappropriation of security deposits by the Residential Landlord Tenant Act seem to be out of touch with reality. The Act provides that “misappropriation of the security deposit shall be unlawful and punishable by a term in a county jail not to exceed six (6) months and by a fine in an amount not to exceed twice the amount misappropriated from the escrow account.” (41 O.S. Sec. 115(A)) When was the last time you heard of a landlord spending time in jail for misappropriating a security deposit? If a tenant called the police and told them that the landlord misappropriated his or her security deposit, they would probably advise the tenant to call someone who cares.

The Act should be revised to provide a more tangible deterrent to prevent landlords from misappropriating security deposits. In a time when the prosecution and incarceration of violent offenders may be described as lacking, the prospect of locking up a landlord for mishandling a security deposit would strike most District Attorneys as laughable, and one would be hard pressed to find a D.A. who would attempt to do such a thing. It is hard to imagine a D.A. choosing to prosecute a landlord to pay even a fine. The legislature should revise the remedy to be that of a civil nature, and put the onus on the tenant to prosecute his or her own case. By providing a civil remedy, the legislature would facilitate the enforcement of this law and tenants would find it much easier to find an attorney to represent them without the need of a retainer. That said, the statute is what it is, and it clearly states that the landlord must not misappropriate the tenant’s security deposit.

Tenants should also be aware of the statutory requirement that they are obligated to demand return of the security deposit in writing. Legally, every tenant is required to make a written demand for their deposit at the same time that they end their tenancy and move out. Even though the landlord may return the tenant’s security deposit without receiving a written demand, the satisfaction of the written demand requirement obligates the landlord to return any balance owed to the tenant within thirty (30) days. If the landlord seems to be dragging his or her feet, turn in a written demand immediately. Oklahoma Statute says, “If the tenant does not make such written demand of such deposit within six (6) months after termination of the tenancy, the deposit reverts to the landlord.” (41 O.S. Sec. 115(B))

If a tenant wishes to recover the full amount of the security deposit, the best chance of doing so is to not give the landlord any reason to deduct for damages or unpaid rent. This means the tenant must legitimately leave the rented property generally in the same condition as when they took possession. If the property was clean when the tenant moved in but the tenant left it filthy, the landlord is justified in deducting the cost of the clean-up from the security deposit. This also means that any and all existing property defects must be noted on the check-in sheet. If a landlord fails to provide a check-in sheet, the tenant should ask for one. The tenant should take the time to note the defects in the property. Popularly missed (and popularly charged for) items include stains and tears in the carpet, holes in the drywall, and broken mini-blinds.

The law is there to protect both the landlord and the tenant. If you find yourself on either side of this equation and you need advice, don’t hesitate to contact us.