What happens to the security deposit when you rent to roommates?

Question

If you rent out an apartment to two unrelated people (roommates/friends), but they're jointly liable on the rental agreement, what happens to the security deposit if one roommates decides to move out?

I assume the remaining roommate gets another roommate... what if the remaining roommate moves out, and then the only tenant left is the new roommate, who wasn't even on the original lease... who would I give the security deposit to?

What would be your recommendation to renting out an apartment to two unrelated people?

Nathan Gesner · Answer

Same thing. I have an Add Tenant Addendum. Tenant C applies, gets approved, and all persons sign the Addendum to add them to the lease.

The basic premise is this: the deposit stays in place from start to finish. It does not get shuffled around as tenants move in or out. When the lease ends, the deposit is paid out to the current tenants on the lease and they determine how it's divided.

Again, I have forms if you would like copies. Get it in writing. Make it clear and simple.

I also charge $50 any time I make changes to a lease. $50 to add a tenant (application fee is separate). $50 to remove a Tenant.

Nathan Gesner · Answer

Get everything in writing.

When one tenant wants to leave, I use a "Remove Tenant Addendum" that says Tenant A is staying, Tenant B is leaving. Specific dates. It also states the deposit remains in place and becomes the property of Tenant A that is staying. If any portion is owed to Tenant B, it is his responsibility to work that out with Tenant A.

Connect with me and send a request, I'll share my form.

JD Martin · Answer

You don't return any deposit. The tenants work that out among themselves. If they each paid $500 on a $1000/month property, and Tenant B is moving out and Tenant C is moving in, Tenant C pays Tenant B $500 and you don't get involved at all. When the lease is up, the deposit is distributed according to the lease. We return deposits to the individual(s) that paid the deposit unless there is a change in tenancy, in which case we would pay the original tenant the deposit. If for some reason there's no original tenants left at the end - meaning you've changed 2 or more people - then you'll have to have some language like Nathan's form to figure this out.

Linda Share · Answer

I have a similar question.

The initial lease was one year and will be over Dec 3. I did not think to put anything in writing before hand (lesson learned). Tenant A would like to extend, Tenant B is moving out. It has not been an amicable break-up. So, you are saying that typically the security deposit stays with tenant A and would be hers when she moves out?

I have been trying to look-up the state law on this, but so far haven't found anything regarding this situation.

Ellie Narie · Answer

If it is a month to month agreement, is that the same? Technically, the apartment isn't empty if tenants move in and out, so I can't inspect it to see how much deposit to return...

Ellie Narie · Answer

What happens if Tenant A moves out, Tenant B gets a new roommate, and then Tenant B moves out? Now tenant C is staying, but the security deposit is still the one that tenant A and B paid?

Christopher Cole · Answer

Exactly what Nathan said. Whatever you do, don't give back any of the deposit while the lease is still active.

What happens to the security deposit when you rent to roommates?

What happens to the security deposit when you rent to roommates?

Most Popular Reply

7 Replies