How Do I Return Security Deposit When A Couple Breaks-Up

Question

Hi All,

I am a buy and hold investor in Indianapolis. I have been investing and self-managing properties for several years and still come across new situations all the time.

Can anyone help me with this one…..

An unmarried couple signed a one year lease and moved into a rental together in December 2020. Shortly after they moved in they broke up. She stayed and he moved out. It got a little ugly with a lot of calls complaining that he did this/she did that. He has wanted out of the lease from the beginning though neither would pay the break lease fee.

Lease is almost up. She wants to stay for an additional six months and would qualify (barely) without him. This would be advantageous to us as summer is a better time to lease 4-bedroom rental that’s in a good school district. She wants to roll over the security deposit for the additional six months. She claims it is hers. It was paid with a money order and she is trying to prove it came from her – I am not sure I have any documentation on this (lesson learned).

He has never mentioned the security deposit, at least so far.

If we find she paid the security deposit, it’s my understanding the refund would go to her. Is this correct?

If we can’t find evidence of who paid the deposit… Can I still roll over this deposit? Do I have to give half back to him at the end of the lease? Or write one check out in both names?

Does anyone have advice?

Thanks in advance.

Steve Miklashevskiy · Answer

@Linda Share - end the current lease, return deposit to the current tenants (let them split it it themselves), sign a new lease with the new tenant (just her) and collect new security deposit just from her. That’s what I would do. It’s a clean break and a clean start of the new lease

Julie Hartman · Answer

@Linda Share Much of how you handle the deposit will be guided by your lease agreement and/or the laws of your state. When we have one half of a couple move out, we explain that the deposit stays with the property so they need to work out that part between themselves. We cannot have a partial deposit on the property. If they are financially high risk, we also don't let the departing resident out of the lease. We want the option to go after both of them in the event that the remaining roommate disappears. It's also helpful to have all residents sign off on the departing resident's room/space because they are now responsible for the condition and any damage. In your situation, I don't think it matters who "paid" the deposit. If they both signed the lease, then I think legally you would be required to write a refund check to both of them, (check your state laws on that). If she is staying put, then the deposit should just stay where it already is.

Jill F. · Answer

When a lease ends, I make the security deposit refund check payable to all parties on the lease and let them duke it out. If one party is signing a new lease, they need to come up with a new security deposit.

Terrell Garren · Answer

Maybe 10 years ago, the police call me about a domestic dispute at one of my house. The wife wanted to kick the husband out, the husband wanted the wife out. Both were on the rental agreement. The officer wanted to know who should have possession of the house. What a mess. From that point forward, I only have one name on an agreement. I've found it to make communications much easier as well as I only deal with the agreement signer.

Chris Wolfe · Answer

Write a check with both of their names on it and let them figure it out on Maury

Mary M. · Answer

you need to read your local law..... pronto.... you are playing a game you dont know the rules of.....In my area I would talk to the tenants and let them know the deposit stays with the unit and they need to work it out amongst themselves. I would take the guy off the lease if he no longer lives there. If there are multiple people on the lease and you dont know who paid what it is best to make the check out to everyone on the lease and let them work it out.

Colleen F. · Answer

@Linda Share if the lease has both names on it and the deposit was paid to secure the lease returning the deposit is to all leasers. We run into this with college students. Unless I get written agreement from all to do it differently I write all names on the check. For an extension like this you could just let the lease go month to month if there is a provision for that and don't worry about the deposit until she moves, this moves the drama to after she is out of the property.

JD Martin · Answer

We return the security deposit to whomever paid it. If there's no record or no proof of who paid it, we return it to all lessees with financial responsibility and let them figure it out. Usually - not always - in the case of unmarried people, a specific person will make the deposit for the entire amount and that is who gets the deposit back. They may have made that deposit with half the money from the roommate, but we have no way of knowing that nor do we care - if there's written proof, it usually favors one person. We rent to a lot of college students, and in those cases where everyone agrees who paid what in writing, we will parcel it out when the lease is over (but not before).

Steve Vaughan · Answer

Same here, Jill. I just love it when they break up and one wants half the deposit back on their way out the door. The deposit stays until the lease is performed on. If one wants to renew, start over with a new lease and new deposit. Make the deposit refund on the expiried lase payable to both lessees.

Matthew Paul · Answer

Let the lease go month to month ( you lease could have that provision ) Then you deal with it then . Kinda what @Colleen F. said .