Dispute between tenants regarding security deposit

[Greg R.]

Hello BP,

I am no longer managing this building as I passed it off to a PM. However, I became aware of a situation the other day and I'd like to get your take on it. The situation is that two friends rented the unit, both of their names were on the lease as joint occupants. About 6 months ago they had a falling out and roommate A moved out. Roommate B stayed and occupied the property for another 8 months .Tenant B took care of the place, made rent payments on time every month, etc. 

Roommate B is now moving out, and roommate A caught wind of it. Roommate A is saying that she paid a third of the security deposit and is demanding that it's returned to her. Roomate B is saying that she paid all of the deposit. They are both calling each other a liar. 

The PM company is saying that they don't get involved in these kinds of disputes, which I totally support. They say that (as normal) the deposit stays in a brokerage trust until all tenants move out. They say that in this situatiuon the full deposit will go to the last person to occupy the property, and it's up to that person to pay out the roommate who left prior. 

Is this standard practice? This is the first time I've personally come across this situation. 

Thanks.

[Richard F.]

Aloha,

There SHOULD be a clear process for adding/removing parties from a Rental Agreement. We use a simple one page addendum, that all parties agree to and sign to remove an existing tenant; and all incoming "new" tenants need to complete an application and pay app fee as usual. You need to ensure the total household income approximates the original group, and/or have Golden Guarantors. If someone skips out without going through the process, we issue only one check, with all names of the currently named occupants (per most recent addendum). If they choose to commit fraud by faking a signature to cash the check, not your problem.

We never deal with partial SD when one party moves out, they need to handle it among themselves, and they collect SD from incoming replacement tenant. They also need to ensure there is no damage that can be charged at move out, because it will come out of the SD the PM is holding. This entire process needs to be spelled out clearly at the time of signing, along with the "joint and several" clause.