Security Deposit Dispute: How Long To Hold Money in Escrow?

[Greg Smith]

Property manager is holding security deposit (several thousand dollars) in

escrow. Landlord makes claims against a large portion of security

deposit upon tenant moving out. Tenant disputes the claims. Property

manager continues to hold funds in escrow pending resolution, however,

no resolution is reached.

Tenant is in process of filing small claims case but hasn't yet. Meanwhile,

the property manager notifies tenant that they are going to close it out

and issue payments (meaning payment to the landlord for his claims and

payment to the tenant for the undisputed portion of the security

deposit).

Questions:

Can the property manager issue these payments from escrow if the

dispute has not been resolved? Or does the security deposit need to

continue to be held in escrow by the property manager? Is there a time

limit for the funds to be held in escrow by the property manager?

[Joe Norman]

What I don't understand is why the landlord is "making claims", that complicates the issue. Isn't it the PMs job to assess damage and stand behind their assessment?

Also how was the "claim" documented? Was there an itemization of costs? Was it delivered via certified mail (or whatever the requirement/standard is in your state)?

To answer your question, I would think that Yes, the PM can distribute the SD as they see appropriate. Depending on the jurisdiction they probably have a set amount of time to do this so they don't want it sitting in their escrow account beyond that.