Security Deposits

It is crucial for landlords to be fully informed about the Missouri law on residential lease security deposits because the courts enforce the statute rather strictly. More than a few landlords have gotten in trouble for not scrupulously following the statute.

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Recent Statute Changes

House Bill 1862, effective August 28, 2016, made several changes relating to security deposits. However, Senate Bill 581, effective August 28, 2018, reversed the 2016 requirement that security deposits be held in a separate trust account and not commingled with other funds of the landlord. It is, however, still required that security deposits be held in a federally insured account.

The 2018 bill did leave in place some 2016 requirements relating to how carpet cleaning costs may be deducted from a security deposit:

1. Overruling a portion of a court decision, it is permissible to include a clause in the lease specifying an amount that will charged against a security deposit for routine carpet cleaning.

2. If such a clause is included in the lease, the lease also must notify the tenant that there may be an additional deduction from the security deposit if more expensive carpet cleaning is required because of conditions beyond ordinary wear and tear.

3. Whether or not carpet cleaning is mentioned in the lease with regard to security deposits:

a. Any carpet cleaning charge against a security deposit cannot exceed the actual expense incurred by the landlord or property manager; and

b. A copy of the receipt for carpet cleaning must be provided to the tenant at the same time as the security deposit accounting is due if carpet cleaning is being deducted from the security deposit.

Scott Law Firm has prepared a recommended lease clause covering security deposits that incorporates the carpet-cleaning requirements and also complies, in our opinion, with all other relevant statutory and case law regarding security deposits. The clause is downloadable from these links:

Word  •  WordPerfect  •  PDF

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Security Deposit Forms

Landlords need two (and possibly three) forms to comply with the requirements of Missouri’s security deposit statute:

Form 8, Notice of Security Deposit Inspection, available on our Forms page and also available here your choice of three formats:

Form 9, Security Deposit Statement, available on our Forms page and also available here your choice of three formats:

See also Form 7, Security Deposit Guidelines, available on our Forms page and also available here: PDF.

Form 7 provides a convenient printable reference source containing much of the information on this page.

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Statutory Requirements

Residential security deposits are governed by Sec. 535.300 RSMo. The key points of the statute before amendment in 2016 were as follows:

  1. You cannot collect a security deposit exceeding two months rent.
  2. The statute requires you to give the tenant reasonable notice in person or in writing at the tenant’s last-known address (which can be the address of the leased premises if no forwarding address was left), of the date and time when you will inspect the premises after termination of the lease to determine the amount of security deposit to be withheld, if any. If you mail the notice, do so at the Postal Service and request a Certificate of Mailing so you can prove mailing. [See Form 8 above for an appropriate inspection notice.]
  3. The inspection must take place at a reasonable time, and the tenant has the right to be present. [See the topic below, “Statements Made During Security Deposit Inspections,” regarding a desirable lease clause relating to security deposit inspections.]
  4. Within 30 days after termination of a lease [see the topic “Lease Termination Date” below], you are required to either:
    • return the full security deposit to the tenant, or
    • give the tenant a written itemized list of damages for which the security deposit, or any part thereof, is withheld, along with balance of security deposit, if any.
  5. You are deemed to have complied with the 30-day requirement by mailing the security deposit, or the list of damages and any balance of the security deposit, to the last-known address of the tenant. It is not an excuse for failing to timely mail the accounting that the tenant did not leave a new address with you. If no new address is known, you should mail the materials to the address of the formerly leased premises. So you can prove the date of mailing if necessary, take the envelope to the post office and ask for a certificate of mailing by first class mail.
  6. The only amounts you are entitled to withhold from the security deposit are:
    • Unpaid rent pursuant to the lease.
    • Repairs necessary to restore property to its condition at beginning of lease, except for ordinary wear and tear. [See the Property Damage page for a discussion of how to document damages. See also the topic below, “Meaning of ‘Ordinary Wear and Tear.”]
    • Compensation for actual damages resulting from the tenant’s failure to give adequate notice to terminate the tenancy, provided that you must make reasonable efforts to re-lease the property and thereby reduce the amount owed.
  7. Penalty provision: If you fail to follow the above-listed requirements in any respect, or if you wrongfully withhold all or part of the security deposit, the tenant can obtain judgment against you for twice the amount wrongfully withheld.

See the section on statutory changes at the top of this page for information about 2016 and 2018 changes.

Notes

Damages Exceeding Security Deposit: If your legitimate damages exceed the security deposit, nothing prohibits you from attempting to recover those damages by filing suit against the former tenant, but you will have to give credit for the security deposit against such damages.

Pet Deposits: The foregoing statutory security deposit rules do not apply to deposits specifically designated as pet deposits. Pet deposits are not required to be refundable. The terms of the lease will govern the use and refundability of pet deposits.

Commercial Lease Security Deposits: The foregoing statutory rules also do not apply to commercial lease security deposits. Such deposits are governed by the terms of the lease.

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Forfeiture Clause Not Enforceable

Some leases, particularly those obtained from non-Missouri sources, contain a clause purporting to “forfeit” the security deposit if the tenant breaches the lease. In our experience, because the security deposit statute is deemed to override such a lease clause, the courts will not enforce such a forfeiture, and if an issue relating to a security deposit is litigated, the court will always give the tenant credit for the security deposit against all monetary losses (rent, property damage, etc.) claimed by the landlord or property manager.

Thus, security deposit accountings should always give full credit for security deposits paid by the tenant.

We recommend that a security deposit forfeiture clause not be included in leases because of the danger that a landlord or property manager or an employee may not be aware of the clause’s unenforceability and rely on the clause in withholding the deposit, which often leads to litigation by the tenant to recover the deposit.

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Statements Made During Security Deposit Inspections

When landlords sue tenants for property damage, tenants sometimes attempt to use statements the landlord made during the inspection to defend against the landlord’s claim. Typically, the tenant will say something to the effect, “The landlord didn’t mention that problem during the inspection, so it must not have existed and I shouldn’t have to pay for it.”

However, as most landlords know from experience, it is common that a particular problem may not be noted during the inspection but will be noticed later when there is more time to look at the unit or when actual repairs are being made.

In view of this problem, Scott Law Firm recommends that the following clause be included in the security deposit section of all residential leases: “Any statements or estimates made by lessor or lessor’s representative during inspection are subject to correction or modification before final security deposit accounting.”

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Meaning of “Ordinary Wear and Tear”

Landlords and property managers often ask for a definition of “ordinary wear and tear.” Unfortunately, there is no clearcut definition in the statutes or in Missouri court cases.

The courts describe the determination of ordinary wear and tear as being an “issue of fact.” In a case involving property damage, this means that the court will consider all the facts introduced into evidence in the case and make a reasonable, common-sense evaluation of whether particular items of claimed damage are within or beyond ordinary wear and tear.

The word “ordinary” in the phrase ordinary wear and tear invokes well known principles in the law relating to “negligence.” The courts define negligence as the failure to exercise that degree of care that the average ordinary person would exercise in the same or similar circumstances. To give an example, the ordinarily careful person would take care when burning candles not to allow wax to drip onto carpets, so wax on carpets is likely to be found to be damage beyond ordinary wear and tear.

In any event, it is clear that intentional damage done by a tenant will be found to be in excess of ordinary wear and tear. A good example of this a hole in a wall caused by the angry tenant punching or kicking the wall.

Some other examples and observations from our long experience in dealing with the issue of ordinary wear and tear in court may help:

Repainting: It is to be expected in the ordinary course of living in a rental unit that some soil will accumulate on painted surfaces. Unless there is an unusual amount of soil, the court likely would hold that repainting costs cannot be charged to the tenant. However, major stains and scuff marks may prompt the court to award painting costs.

Tenant repainting: Another situation in which repainting costs generally are awarded is when the tenant has repainted without permission and done a sloppy job, or has used colors not approved by the landlord.

Holes in walls: Another painting issue involves holes in walls, often resulting from the tenant having hung pictures and photographs. If the tenant has filled the holes with spackling which matches the paint, and there is no other particular reason to paint, the court likely would not award repainting costs. However, if the holes have not been filled, or the holes were filled with spackling that does not match the wall color, the cost of filling the holes and/or the cost of painting may be awarded.

Routine repainting: Some landlords have a routine practice of totally repainting every time a rental unit turns over – in this situation, the court seldom awards repainting costs unless there was paint damage beyond ordinary wear and tear.

Flooring: Issues often arise as to whether landlords can recover for damage to carpets, vinyl flooring, linoleum and wood floors.

Carpets: If the tenant has been careful with the carpets and routinely vacuumed during the tenancy, any normal traffic wear on the carpets likely will be found to be within ordinary wear and tear. However, if the carpets have stains that cannot be removed by normal cleaning processes, or tears, or burn holes, then the court likely will give the landlord an award for replacing the carpets. The court may require, however, that the amount awarded be pro-rated based on the expected life of the carpet – for instance, if a carpet is expected to last 10 years and must be replaced after only five years, then the court would award 50% of the replacement cost.

Vinyl flooring and lineoleum: Normal traffic wear on vinyl flooring or linoleum will not be deemed compensable by the court. However, if the material is stained such that it cannot be cleaned, or has burn holes, or is ripped, then the replacement cost may be allowed. Again, the court may require the replacement cost to be pro-rated based on the expected lifespan of the material.

Wood floors: Again, normal traffic wear on wood floors will not be seen by the court as compensable. However, if the wood flooring is scratched, gouged, stained, etc., then the cost of refinishing the floor likely will be awarded. In extreme cases, the court might allow an award for replacement of a wood floor, again requiring pro-ration based on the expected lifespan of the wood flooring material.

Hardware: In the normal course of usage, certain items of household hardware will wear out and need to be replaced, and in such cases, the court will not give an award for the replacement. However, if the hardware item was clearly abused or intentionally damaged, then the court likely will grant an award for replacement. For instance, if a doorknob becomes worn and unusable as a result of normal use, no replacement cost will be granted; however, if the doorknob was ripped off in a fit of anger, then the replacement cost will be awarded.

Plumbing fixtures: As with hardware, plumbing fixtures will wear out with age and parts will need to be replaced. Toilets and faucets are a particular problem. Unless it is clear that the plumbing fixture has been abused or intentionally damaged, the court is not likely to award replacement costs. However, we have seen awards for cracked toilets and tubs, cracked toilet seats (unless the seat was of low quality to start with), heavily soiled tubs and sinks, and drain stoppages caused by, for instance, items such as sanitary napkins having been improperly flushed in the toilet.

General cleaning: Assuming the unit was clean when the tenant moved in, the landlord’s cost to clean the unit after the tenant moves out if the tenant failed to do so is recoverable — because the tenant’s obligation is to return the unit in the same condition as when originally occupied, ordinary wear and tear excepted.

In summary, when a landlord or property manager is faced with the question whether a particular item consitutes damage beyond ordinary wear and tear that is not discussed above, the best advice we can give is that the landlord should ask himself or herself, “Is this damage something that could happen if the tenant exercised the same degree of care that the average ordinary person would exercise in the same circumstances?”

  • If the answer is “yes,” then the item of damage should not be charged to the tenant.
  • If the answer is “no,” then the item may be charged to the tenant.

Even when the landlord or property manager is cautious about what items are charged against a tenant’s security deposit, we have found that tenants often disagree, and some will file a Small Claims Court lawsuit against the landlord to recover their deposits. When this happens, we have generally observed that landlords who can articulate a reasonable basis for items of damage being beyond ordinary wear and tear based on the discussion above will win such lawsuits.

Landlords and property managers who are uncertain whether to claim a particular item as damage beyond fair wear and tear after reviewing the discussion above are welcome to consult with us. We will endeavor to give our best advice based on our experience dealing with such issues in court over a period of many years.

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Lease Termination Date

When does a lease terminate? Depending on the circumstances, sometimes it can be difficult to determine when a lease “terminates,” thereby starting the 30-day period to account for the security deposit. Following are some guidelines for making this determination:

  • If the lease contains a definite termination date and the tenant moves out on or shortly before that date, then the termination date specified in the lease should be used.
  • If the lease contains a definite termination date but the tenant “skips” long before that, the lease will terminate on the earlier of the termination date specified in the lease or at midnight on the day before a new lease to a subsequent tenant takes effect. You are required by law to make good faith efforts to re-rent the premises and thereby “mitigate” your damages. Examples:
  • Assume the lease specifies a termination date of May 31. Tenant skips in January. You make good faith efforts to re-rent and a new tenant signs a lease effective April 1. In this case, March 31 would be the termination date for the old lease, and the security deposit accounting would be due within 30 days of March 31.
  • Assume the lease specifies a termination date of May 31. Tenant skips in January. Despite your best efforts, you are unable to re-rent the premises before May 31. In this case, May 31 would be the termination date, and the security deposit accounting would be due within 30 days of May 31.
  • Oral month-to-month leases, or written leases that have become month-to-month leases, present unusual problems in determining a termination date for security deposit accounting purposes. In these situations, it is recommended you consult with Scott Law Firm.

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Lease Renewals

If a lease is being renewed and all same tenants will remain, the security deposit paid under the prior lease can simply be “rolled over” with a notation on the renewal that the deposit was paid under the prior lease.

A problem arises, however, if a lease is being renewed and at least one tenant is not going to remain on the renewal lease. In this type of situation, here is what should be done:

  • Give all the current tenants a notice of security deposit inspection.
  • Conduct the inspection.
  • If there are deductions to be made from the security deposit, make the deductions on a pro-rata basis among the tenants based on what they paid toward the security deposit.
  • Give a refund, if any, to the departing tenant, along with the security deposit accounting.
  • On the security deposit accounting for the continuing tenants, show that their remaining deposit, if any, is being applied toward the deposit due on the renewal lease and collect the difference to bring the deposit up to the full amount required under the renewal.

Simple Example: $900 deposit paid equally by 3 tenants. $300 in damage. Allocate $100 in damage to each tenant. Refund $200 to departing tenant. Give continuing tenants each $200 credit toward deposit for new lease.

Note: A departing tenant may say, “I didn’t do that damage, so I shouldn’t have to pay anything.” Up front, before the inspection is done, you should explain to the tenants that they are all jointly liable for any damage under the lease, that you have no way of adjudicating which tenant is responsible for which damage, and that if a tenant believes another tenant should be responsible for more of the damage deduction, that tenant has the right to sue the responsible tenant if the responsible tenant does not pay voluntarily.

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