Q: I had a renter who signed a one-year lease and then asked to terminate the lease one month early. Since she had always paid her rent on time, I allowed her to use the security deposit to cover her last month's rent. When she moved out, she signed an agreement stating that she agreed to be financially responsible for any damages beyond normal wear and tear.
After she moved out, I inspected her unit and found damages totaling more than $1,000. She moved out in February, and I waited until June to send a bill to her because I was dealing with some personal health issues. She is now refusing to pay the bill to cover her damage to the unit. Do I now have a right to sue her in small claims court?
A: In Minnesota, every landlord must, within three weeks after the tenancy ends, return the tenant's security deposit with interest, or provide a written statement showing the specific reason for withholding all or part of the security deposit. As a landlord, you may withhold from the security deposit only the amount reasonably necessary to cover past rent owed or other money owed due to an agreement with your tenant, or to restore the apartment to its condition at the start of the tenancy, excluding ordinary wear and tear. But if a landlord fails to send the letter within the required time, then the landlord is subject to certain penalties.
In addition, the law states that no tenant is allowed to withhold payment of all or any portion of their rent to cover the last month on their lease, except when there is an oral or written month-to-month lease when neither the tenant nor landlord has served a notice to quit, or for the last month of a contract for deed in certain circumstances.
If a tenant goes ahead and withholds the last month's rent, intending that the security deposit be used to cover that month, then the tenant is liable for certain penalties, as long as the landlord sends a timely letter objecting to the use of the damage deposit as rent and demanding that the rent be paid.
Minnesota law also states that any attempted waiver of the statutory requirements relating to the security deposit by a landlord and tenant, in a contract or otherwise, is void and unenforceable.
So, your situation raises multiple issues, and it is difficult to predict how a court will decide. First, you failed to send a letter within three weeks of the termination of the tenancy outlining the reasons for withholding from the deposit, and outlining any amounts needed to restore the unit to its condition at the start of the tenancy, excluding ordinary wear and tear. A court may not allow you to proceed with a claim for damages after failing to send the letter in a timely manner. You could argue that the security deposit was no longer being withheld since it was used to cover your tenant's last month of rent, and therefore the letter was not required, or at least, there was no damage to the tenant.
Second, the agreement signed by you and your tenant allowing her to use her security deposit as the last month of rent may also raise issues. At a minimum, you and the tenant agreed that she could avoid paying damages relating to her use of the damage deposit as the last month's rent. However, depending on how that agreement was written, the court may decide that you waived your right to pursue the tenant for damages through signing that agreement.
Finally, as noted above, any attempt to waive the statute is void and unenforceable.
You can sue your tenant in small claims court, but I'm not sure how a judge will rule since you entered into an agreement with your tenant allowing her to use her security deposit as last month's rent when state law prohibits it. Also, because you waited several months to contact her, a judge may not react favorably to your case.
Kelly Klein is a Minneapolis attorney. Participation in this column does not create an attorney/client relationship with Klein. Do not rely on advice in this column for legal opinions. Consult an attorney regarding your particular issues. E-mail renting questions to kklein@kleinpa.com, or write to Kelly Klein c/o Star Tribune, 650 3rd Av. S., Minneapolis, MN 55488. Information provided by readers is not confidential.
