What about withholding a legal notice to me from CE for three days? 

I liked their camaraderie, what more can I expect as landlord than having happy tenants around.One of the tenants left recently messed up few things as well as broke the lease terms so I had to withhold partial deposit and explained them why I had to withhold but the tenant left unhappy and not convinced.My current tenant who was friends with my previous tenant is pissed off with me,anyone ran into this situation?

We gave the landlord a formal notice on july 1st, telling him we will be withholding our rent until he fixes the problem, nothing has been done to fix the problem yet the manager is asking us for the rent already.

I once had a former PM withhold part of a tenants deposit when I switched PM's.

There are often only very specific circumstances where you can keep a deposit, and sometimes there are triple damages to pay if you withhold it illegally.

If your current tenant is moving out at the end of the month (July) and the new tenant is moving in for the first of August, you have no issue with "holding" the apartment ... you are simply renting it for the first window in which it is actually available.Sign the lease for the first of August, collect the security deposit.  

In most jurisdictions a landlord must have receipts and have work performed and bills submitted by licenced contracts in order to justify withholding security deposit.

And, the housing authority can withhold funds if you haven't passed an inspection, etc.Basically - if you don't have to accept Section 8, then don't.  

This is actually why most tenants who move away never sue their landlords for illegally withholding their security deposits - because they have to sue where the contract took place.If you get a judgment first, a collector will take a smaller percentage.  

Tell your tenant he is responsible for all costs associated with the flood, if he decides to leave withhold his money and tell him you will take him to small claims court for all additional costs.