Rental Basics in Brentwood>Question Details

Renter 925, Other/Just Looking in Brentwood, CA

Can landlord legally hold security deposit after agreeing to allow an early termination of a lease?

Asked by Renter 925, Brentwood, CA Tue Jul 21, 2009

When my employer notified me of a move, I had an option to move with them or to take a severance package. I contacted the property agent to see if my landlord would allow an early termination of the lease without penalty as option 1 or as a last resort keep security deposit since my employer would cover. Landlord had house on market and was eager to sell so they agreed (via email) to allow early termination of lease without penalty. After i moved, i returned keys and everything was in order but landlord never returned deposit. Sent demand letter and I get a letter saying they didnt agree to option 1 but rather let me out in lieu of the deposit and if I continue to seek the deposit, they would sue me for breach of contract and rent through end of lease even though they have not been looking for new renters due to sale of property. Since I have email to support my actions would I have a strong case to sue for the deposit and bad faith penalties?

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Rick’s answer
I am a landlord. There is a great deal of misinformation and I was just in Court where a tenant was demanding the deposit returned. The tenanst trashed the place and they lost. In your case, I believe as the tenant, you noticed the landlord of your intent to move. I believe the landlord would have to prove damages caused by your breach and that by giving the landlord notice, you limited your liability. If the landlord was able to rent the property right away, they have no damage. Most people agree that one month's rent or the security deposit is the maximum amount of damages. However, since the landlord is threatening retaliation if you seek the return of your deposit, that works in your favor. I think you could win and have little chance losing given that the property is for sale and they are choosing not to rent. Another key is what was the converstation as to early termination. As you have depicted, there was no agreement to forfeit the deposit and it sounds like they are acting in bad faith. I would probably bring suit and see what happens. Be nice. Stick to the facts as you have in your question and hope you get a Judge who likes you.
0 votes Thank Flag Link Sun May 27, 2012
Thank you Myriam for the information you provided. I actually found a reference that I will be using in this matter (Granberry vs. Islay Investments, 1995). Essentailly, the CA Supreme Court ruled that because a landlord failed to return the security deposit as required by state law within 21 days, he/she waived their right to the holding of the security deposit.

Furthormore, because the emails between myself and the owners agent is considered a legally binding contract (Offer, Acceptance, and Consideration), this can be used as evidence in small claims court regardless of what the original lease states because essentially it is an amendment to the original contract!

Thank you to everyone who took the time to respond to my question (even though I know some of you could not provide legal advise)
0 votes Thank Flag Link Thu Jul 23, 2009
I just wanted to add that there is no need to an attorney and pay $$. The California law about the security deposit is strait forward and can be easily googled. The website that Dave gave is also very informative. Also, there is no need to pay someone to file the claim, but simply use, it costs nothing, it walks you through the process step by step until you print the completed forms and you take them to the court for filing. I am not a Realtor so I assume I can convey to you the above information:-).
0 votes Thank Flag Link Wed Jul 22, 2009
What is legal regarding deposit issues can be tricky so honestly it's probably best to ask an attorney. Obviously it depends on what your contract says and what the termination agreement was. Depending on what your deposit was it may not be worth paying an attorney for an opinion. Best of luck!

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0 votes Thank Flag Link Wed Jul 22, 2009
Hi Renter 925,

I recently (two months ago) sued in small claims court (Fremont) my previous Landlord for not returning the security deposit after 21 days of the move out date (California law). I won the claim and the Landlord was ordered to pay the security deposit, the court fees, and a penalty (twice the security deposit amount for bad faith, that's the maximum allowed in California if you can demonstrate to the judge that the Landlord deliberately refused to return the security deposit).
My case is we signed a 6-month lease with the Landlord, then after one month the property management agent of the Landlord asked me whether I would agree to leave the condo earlier because the Landlord lost her house and was in a motel. As a gesture of good faith I accepted (verbal) thinking that I will get my security deposit on time. After 21 days, I contacted directly the Landlord by mail but she refused to refund the security deposit on the basis that the property was left in a mess. She produced fake receipts and pictures. Fortunately, I had the e-mails, the inspection sheets (move in and move out inspections), the lease, and the letters. The Judge gave her 30 days to pay and she did.
You will have to make sure you have all the documents (lease, letters, e-mails) to support your case. If they did not stress in writing that you will not get back your security deposit in exchange for an early termination of your lease, you can sue them and easily win. You will need to read your lease carefully and any documents you have. Security deposit can not be used for penalty. The california law clearly states the purpose of the security deposit and what a Landlord can deduct from it. I even printed the section of the law and took it with me to the court. I was determined to win the case:-).
Good luck to you. Myriam
0 votes Thank Flag Link Wed Jul 22, 2009
You may want to see this page about security deposits on the State of California's Dept. of Consumer Affairs web site
0 votes Thank Flag Link Wed Jul 22, 2009

You have to go back to the contract and review it. If a tenant leaves before the term of the contact is reached the tenant is responsible to pay rent for each month that the landlord can not find a tenant(landlord must make the effort to find a tenant).

Your landlord may have released you from the obligation to be responsible to pay each month rent that he tries and can not find a tenant. The deposit is taken for many reasons. One could be to protect the landlord from a tenant who like to break the contract . I hope you have a copy of the email. Review the email and see if he mentions anything about the deposit. If the deposit money is substantial you may seek an attorney's advise. Or settle the matter in a small claim court.
0 votes Thank Flag Link Tue Jul 21, 2009

Realtors are not allowed to give legal advice per our code of ethics. Your questions is asking for a legal opinion of your situation and as such - I'm sorry to say - but you should really be contacting an attorney. Best of luck to you, I'm sorry that you have to go through this. Sounds to me like the owner is changing their story after things didn't work out the way that they wanted.

Cameron Piper
Web Reference:
0 votes Thank Flag Link Tue Jul 21, 2009
Send your Landlord a copy of the email confirming his/her acceptance of option 1...then see how he/she responds. If your deposit is not returned, you will need to file a complaint in small claims court. Your email evidence should be compelling
0 votes Thank Flag Link Tue Jul 21, 2009
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