How to Open a Trust Account for Security Deposit

Steps to take before and after you move out to ensure your landlord returns your security deposit.

Most tenants who are moving out of a rental want their security deposit back as soon as possible, either to make a deposit on a new rental or for use in a down payment on a house or condo. Unfortunately, some landlords drag their feet in returning the deposit, or wrongfully withhold money from the deposit.

Your landlord must follow state law when handling your security deposit, which means using it only for certain expenses and returning it to you by a specific deadline. But not all landlords comply with—or even know—the law.

As a renter, here's what you can do to make sure you get your money back in a timely manner.

1. Plan Ahead

Take these steps before you move out to get your security deposit back on time and in full:

• If you have a month-to-month tenancy, give your landlord the legally-required notice to end your tenancy (30 days in most states). If you don't give proper notice, you could end up owing extra rent, which the landlord can take out of your security deposit. Make a copy of your notice and send it by certified mail, return receipt requested. You'll need this evidence if you end up in small claims court fighting over the deposit.
• If you're leaving before your lease ends, find another tenant to rent the unit. If you don't, and the landlord does not re-rent the property quickly, you might owe rent until the end of the lease term—and your security deposit will quickly be used up.
• If you're the only tenant leaving, negotiate with the others or the landlord for early return of your share of the deposit. Landlords have no legal duty to return the deposit until all cotenants leave, so you'll have to try to work something out.
• Ask to be there when the landlord inspects the unit. Always ask to attend the landlord's final property inspection, so you can fix problems or do more cleaning. Several states give tenants the legal right to be present at the final inspection.
• Confirm your cleaning plans with your landlord. Make sure you understand what your landlord expects, so you don't end up under- or over-cleaning.
• Get the rental in good shape. Clean thoroughly and fix any damage you, your guests, or pets have caused. When you leave, return all keys and remove everything, including garbage, food, and cleaning supplies.
• Document your cleaning and repair work. Take photos and videos of the rental when you're done, and get witnesses who can attest to your work.
• Give the landlord your forwarding address. In some states, a landlord who can't locate you within a specified time can keep the deposit.

2. Don't Confuse Last Month's Rent With the Deposit

If you've paid a sum of money clearly labeled "last month's rent" before moving in to a rental, you can obviously use it to cover the last month's rent before you move out. (In many states, this amount is considered part of the deposit when it comes to limits on total deposits.)

But if your landlord specifically collected a security deposit, don't assume you can use this money for the last month of rent unless you get the landlord's okay. Most landlords will typically want to hold on to the whole deposit until you move out, in case they need to make repairs or do extensive cleaning. If you use part of the deposit for last month's rent, your landlord might not have sufficient funds to cover replacing items, making repairs, and cleaning the rental unit.

3. Know What You're Entitled To

Most states hold landlords to strict guidelines as to when and how to return security deposits. Landlords who violate these laws may lose the deposit entirely or face hefty penalties.

Every state's laws are different. Knowing your state's rules—when it comes to security deposit limits and deadlines for returning deposits—is crucial to making sure you get what you're owed.

When the Landlord Must Return the Deposit

Most states set a deadline, usually two to three weeks after you move out, for the landlord to mail you the following:

• an itemized statement as to how the deposit has been applied toward back rent, cleaning, and repairs
• what's left of the deposit (including any interest that is required by your state or city), and
• if required by your state, a list of proposed deductions before they are actually made.

How the Landlord May Use the Deposit

State laws typically allow landlords to use deposits to cover:

• unpaid rent or other charges—for example, unpaid utility bills
• repairing damage you or your guests caused (but not for ordinary wear and tear), and
• cleaning the premises so they're as clean as when you moved in.

The general rule is that you are not responsible for normal wear and tear. For example, if the dishwasher must be replaced because it simply wore out, that's ordinary wear and tear.

4. Follow Up With the Landlord

If you're unhappy with your landlord's deductions, you don't get an itemization, or the landlord broke state security deposit law in some other way, try to work something out. If you come to an agreement—perhaps the landlord will return some of your deposit if you do additional cleaning—put it in writing and sign it. The agreement is a legal contract, and if the landlord fails to honor it, you can go to small claims court.

If negotiations don't work, write the landlord a demand letter asking for the return of the deposit. Many states require this before you can sue in small claims court, so if you don't make a written demand for its return, you risk losing your deposit altogether. Even if it's not required, a letter might motivate your landlord to act because it shows you know your rights and will insist on getting your money.

Your demand letter should:

• Concisely review the main facts and lay out the reasons your landlord owes you money.
• Include copies of relevant letters and agreements, such as your notice to move out.
• Ask for exactly what you want, such as the full amount of your deposit within ten days.
• Cite state security deposit law.
• Say that you will promptly sue in small claims court if necessary.

5. Sue in Small Claims Court if Necessary

If your landlord does not respond by your deadline or you're dissatisfied with the response, you can file a lawsuit in small claims court (called Justice of the Peace, Conciliation, Justice, City, or County court in different places).

Sue for the amount of the security deposit that your landlord wrongfully withheld and, if it's required by your state or city, for interest. You can also sue for extra punitive damages (depending on your state rules) if the landlord acted in bad faith. In most states, the small claims limit is $5,000 to $10,000. See your state's small claims court limit for details.

Filing a small claim usually costs $10 to $50. You don't need a lawyer, and disputes typically go before a judge (there usually are no juries) within a month or so. To prepare for small claims court, you'll need to gather and clearly organize all of your evidence, such as your notice of intent to move out, photos of the rental unit before you moved in and when you left, and demand letters.

The trial, which consists of each side presenting its version of what happened, seldom takes more than 15 minutes. The judge either announces a decision right there in the courtroom or mails it out (often within a few days).

How to Open a Trust Account for Security Deposit

Source: https://www.nolo.com/legal-encyclopedia/get-security-deposit-back-29695.html

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