Landlord Question and Answer Forum

I have a tenant who was signed to a one year lease from June 2012 to June 2013. His move in costs were 1900.00 total as first and last months rent at 950.00 each. The last months rent was to serve as a security deposit and he was given a security deposit receipt and disclosure statement that stated where the 950.00 was being kept and at what interest rate. He broke his lease and moved out three months prior to the end of his term. He also helped me out in getting a new tenant in who is now signed to a 15 month lease so his move-out was amicable. We did a walkthrough together and the house had been well taken care of. I returned the 950.00 to him in a cashiers check via certified mail. He is calling me now saying that he thinks that the full 1900.00 that he paid to move in should be returned to him. Is there a problem here? I am in Michigan. What does the law state regarding first and last vs security deposit? I think that i am being more then fair with my former tenant considering that he did break his lease but am i missing something? Any wisdom is welcome. thanks.

I supposse its a gamble... if they argue for it back, who is right or wrong. They ended the lease early, but you found paying tenants to fill that spot. If there was no damage and you lost no money, what are you keeping the money for?

Posted by karen s, WI on Monday, April 15, 2013

If I am understanding it right he paid you $950 for first months rent and $950 for last months rent, correct? He lived there the first month so that is what it was used for. Now since he didn't live there the last month but did find you a tenant to replace him I think it was fair to give him back the last months rent since he was no longer living there but found someone that would replace the normally lost income.

Posted by Rebecca L, TX on Wednesday, May 15, 2013

@Karen – There could have been other costs such as advertising, credit check, etc. which tenant should be responsible for.

Posted by Bob R, CA on Wednesday, May 15, 2013

@Todd – Rebecca may have miss the fact that you converted the last months rent to a sec.dpst…..I agree with Rebecca on the 1st $950. The other $950 that was converted to sec.dpst. was returned to him. If there were any expenses in finding a new tenant, I would have deducted that amount from the $950…. The bottom line, you don’t owe him anything. The fact that he helped you find another tenant doesn’t excuse him from any liability cause due to breaking the contract. If he continues to demand his $$$$, ask him to put in writing (for clarification) the amount and why he should receive a refund. -----Disclaimer: Since I’ve been answering a lot of questions, I thought I would make the following statement. I’m not affiliated with EZlandlord Forms. I’m just here (not sure how long) to help those that have questions. Having 40+ yrs with Rental Property and done well, it’s my way of “Pay it Forward (check out the movie).” However, it is up to you to become familiar with Fed/State/Local and Tax Laws. I always like to know if the suggestions I offer are helpful. Feel free to comment anytime. Thanks in Advance. BTW...check out the Rental Property Organizer at Simp-List.com. Free Trial Download. A great program at tax time and at a great price! Check it out.

Posted by Bob R, CA on Wednesday, May 15, 2013

I would like to make a suggestion for future reference to you. Do NOT make the security deposit and last months rent the same. Keep rent - rent and security deposit just that. If you don't then after the last months rent you have a lot harder time in collecting money for damages and other monies owed to you. Besides in the state of Michigan anything beyond the first month rent is legally considered a security deposit. Also just for you information you can charge up to 11/2 months rent as a security deposit in Michigan.

Posted by John T, MI on Wednesday, January 15, 2014