Agent2Agent in Folsom>Question Details

Ed Favinger, Real Estate Pro in Folsom, CA

Owner of prop I manage did not return former tenants deposit & now tenant is suing me even though the lease says they can't hold me

Asked by Ed Favinger, Folsom, CA Sat Jul 2, 2011

responsible...! The deposit was given to the owner at move in along with the rents minus our fees... This tenant has been there over 5 years.

After move out, the tenant comes to us and complains about not getting back the deposit.

We explained to him that we never keep security deposits, they are given to the owner and further more in his lease there is a section that is checked saying we do just that... give it to the owner..

I pointed out the clause is this standard CAR form that he signed which says: IF THE SECURITY DEPOSIT IS HELD BY OWNER, TENANT AGREES NOT TO HOLD BROKER RESPONSIBLE FOR IT'S RETURN.

After i was served with the Small Claims papers, I called the guy and again pointed it out.... he fires back saying he spoke to an attorney and he's entitled to his deposit back.

Have any of you had this problem and have gone to court over it.

Help the community by answering this question:


Andy... what it shows is that we should use Standard C.A.R. forms or CAA forms in our business to protect us...and I'm also happy that the judge did the right thing...
0 votes Thank Flag Link Wed Aug 10, 2011
Hi Ed,

Sorry to hear your story. That tells you how important risk management is.


0 votes Thank Flag Link Wed Aug 10, 2011
Way to go Ed! Score 1 for the good guys.
0 votes Thank Flag Link Wed Aug 10, 2011
Ok... I thought I'd update everyone on this case...

We were in Court today... wasted my time... that's the upshot... and wouldn't you know that they'd call my case close to the end...

Bottom line is the judge just blew the stinking tenant out the door and told him that you can't go after a property manager when they don't have the deposit.

The tenant still has the right to go after the owner...

It's amazing to me that I could have given this guy his entire deposit back in early July if he had wanted to take it. I told him that I had re-rented it and collected the money and could write a check... but nope... he wants to get double because he think he's owed it... That's what our society has come to in my opinion...

The bright side is at least the judge followed the "lawful" contract and found in my favor...they can't go after a property manager just because he wants to...
0 votes Thank Flag Link Wed Aug 10, 2011

I always use standard CAR (California Association of Realtors) and CAA (California Apartment Association) forms in my business.

The quote in all caps in my question comes right out of the CAR lease agreement. I'm just curious if any one in the business here in California has ever had to go to court in this circumstance and what was the end result.

I have sent a note the CAR legal hotline and I'll let you all know what they think when I get an answer back. My court date is not until the 15th of next month.

It is funny though after I attached a copy of the small claims summons the owner did return my email... gosh... you'd have thought he would have done that a while back... and it also irritates me that he ignored my phone calls as well...

It's just another great day in real estate...
0 votes Thank Flag Link Mon Jul 4, 2011
Did you have a hold harmless clause in your contract with the owner? Do you know where the owner is?

In my experience any time someone says they have an attorney, but the attorney's name is not on the complaint, they do not have an attorney and it is very likely the person never talked to an attorney.

The law is different in every state and I cannot speak to yours. However, in my state as an agent you would be liable along with the owner. A clause in a contract that is incompatible with law is not upheld.

The clerk of the court for your county should be able to tell you whether or not the owner has been served with the complaint, and the owner's current address where he was served. I would contact him and tell him to pay it before the court date. You can file a counter-claim against the owner for any damages you may be held liable for, as well as your lost wages in dealing with this.
0 votes Thank Flag Link Mon Jul 4, 2011
Ed, let us know what happens at the end of this kerfuffle. I hope you win your case.
0 votes Thank Flag Link Sat Jul 2, 2011
Jim Walker, Real Estate Pro in Carmichael, CA
I've never been sued for this myself. Do you belong to the Sacramento Rental Housing Assn? Even if you don't, you can contact them for advise. Once a month they have an open table q & a with an attorney specializing in landlord tenant law. I wonder if you can go after the landlord.
0 votes Thank Flag Link Sat Jul 2, 2011
Perhaps you should inform him that when he looses the suit in small claims court, you will have prepared a counter-suit against him for travel/inconvenience, that if you win, he'll be required to pay. At least that is how it works down here in Los Angeles as the defendant can file a "Defendant’s Claim". Make sure you hire the sheriff to serve them, request one that is a total jerk.…

One lawsuit always deserves another I say.

I suspect this tenant cannot find the owner, thus he is suing you, as I've seen this recommended on various California county websites "If the owner cannot be found, serve the manager". You may want to inform the tenant who the owner is, so they can get the deposit back from the appropriate person.

First, you may want to just write the plaintiff a letter, something along the lines of:

"I am sorry that you owner did not return your deposit, however the lawsuit you have filed against me is frivolous and completely without merit. Please be advised that if you choose to proceed with this lawsuit I will counter-sue you for the amount of my lost wages for the day I must appear in court in the amount of $XXX.XX; and for mileage to drive the XX mile round trip to the courthouse in the amount of $XX.XX."

Before acting on any of my quasi "advice", consult an attorney.
0 votes Thank Flag Link Sat Jul 2, 2011

We followed protocol... did the pre-move out inspection, sent him the estimated statement within the 21 days etc... but we didni't have the money to give back to him. My trust account only had about a $100 reserve.

We contacted the owner several times... he just ignored us and figured we will just give the deposit back to the old tenant we moved in a new one and collected rents and deposits from the new one. I'm assuming he's got an aversion in sending money back.

I explained this to the tenant...

So I think I'm covered as far as protocol. It's not that i'm disputing he gets the deposit... it's that I don't have it... and that's in his contract. even if I didn't follow protocol all that does is guarantee the tenant gets it all back.

Have you ever been sued in court over a similar situation and what was the outcome... that's what I want to know. I mean this guy signed the "standard" CAR lease... does a contract mean anything in your opinion or...?

get back to me...
0 votes Thank Flag Link Sat Jul 2, 2011
Hard to say without more questions. Was there a move out inspection? Why were your fees deducted? Was the tenant given an itemized statement explaining the refund amount? My first thought is that you, being the broker, is responsible for making sure protocol is followed no matter who's holding on to the deposit.
0 votes Thank Flag Link Sat Jul 2, 2011
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