How to handle security deposit when 1 tenant leaves & 1 stays?

[Gabriel B.]

The lease term will be ending in 60 days for two tenants.  One tenant has provided ample notice that she will be leaving.  The other tenant, however, indicated they want to stay.  How would you handle security deposit in this situation?  

My thoughts were to conduct a move-out inspection at the end of the lease term and return security deposits to both tenants.  Thereafter, I would create a new lease agreement with current tenant provided she finds a new roommate.  

What are your suggestions? 

[Nathan Gesner]

This is very simple. The security deposit remains with me until ALL tenants are out and the lease is terminated. 

If Tenant A wants to leave and Tenant B wants to stay, Tenant A needs to get their share of the deposit from Tenant B. Or not. I really don't care what they work out but I do care that the deposit is staying with me. I'm not writing extra checks, I'm not collecting more money.

I also recommend you have a written agreement with Tenant A that includes:

- Tenant A is leaving on (date);

- Tenant A loses all rights to the property and the security deposit. If a portion of the deposit belongs to Tenant A, they should seek compensation from Tenant B;

- Tenant B releases Tenant A from all responsibilities, to include damages.

I'm sure you can find example forms with a Google search.