Is the Security Deposit OK for the Final Month’s Rent?

VOLUME 3R

By Juliana Torres-Mason

Renters transitioning to a new home have a lot on their minds when it comes to closing accounts, changing their addresses and paying new bills. As the costs of the move pile up, they may be tempted to skip paying the last month of rent. After all, can’t the security deposit cover what is owed?

The short answer is a resounding “no,” said real estate attorney Evan Rosenberg with the Florida firm Ritter Chasid.

While renters may have paid the cost of a full month’s rent as a security deposit, the purpose of those funds is to cover any damages the renters left behind. The security deposit was rarely if ever intended to be applied to the last rental payment.

Although he has seen a lease that did indeed allow the security deposit to be deemed the first or last month’s rent, most lease agreements have no such clause.

“Unless the lease says you can, it’s not recommended,” Rosenberg explained.

To avoid serious legal and financial consequences, renters should pay their last month of rent like they normally would. As they move out, renters should clean the home and repair any incidental damages (ex. tack holes in the walls). Renters can take pictures of the home before they move in and as they move out to help document their efforts.

If the rental appears clean and undamaged, the landlord will be legally required to send the full amount of the security deposit to the renter’s forwarding address.

However, Rosenberg said he has seen firsthand what can happen to renters who leave their last rental payment to the whims of the deposit.

“It can lead to a lawsuit,” Rosenberg said.

If the security deposit isn’t enough to cover both the rent owed and any damages found at the property, landlords can sue their former tenants for the rest of what is owed. If the judge sides with the landlord, renters will end up paying even more than the cost of rent. That’s because most lease agreements in the state of Florida include a clause that requires tenants to pay the attorney fees of their landlord if they lose in a civil case.

“So you could end up paying for the damages to the property, any rent still owed and attorney fees—and that could be very expensive,” Rosenberg said.

Meanwhile, in Texas, although the Texas Civil Practice & Remedies Code Section 38.001 would have previously allowed recouping legal fees from individuals even before Texas Governor Abbott made tweaks to it in mid-June 2021 to include LLCs and other partnerships, there still needed to be some kind of written documentation in the lease about attorney fee provisions. Otherwise, Texas followed the “American rule,” which requires each party to pay their own litigation costs.

Beyond court costs, renters may find it more difficult to rent a new property for years to come, Rosenberg said. As part of their consideration of potential tenants, landlords often pull court records to look for prior lawsuits filed to recover property damages or rental payments.

“You’re going to have a scarlet letter that’s just like having a blemish on your credit,” Rosenberg said. “You’re going to have a pretty difficult time trying to rent again.”

While it may be temporarily convenient to try to force the landlord to apply the security deposit to the last month’s rent, in the end, it’s just not worth it.

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