26 Jul 2019 6:02 PM | Nicole Burt (Administrator)

Let’s get back to basics with a case study in, “What can I do with my security deposit?”

Here’s a tenant on a lease for $900/mo which expires August 31st.  S/he pays the May rent but nothing comes in for June.  On June 7th the landlord reaches out.  The tenant says that s/he moved out a couple of weeks ago and never got around to notifying the landlord.  Fortunately, the unit only shows normal wear and tear, and a new leasehold tenant moves in on June 16th

The landlord is holding $1,200 security deposit and asks what to do.  My analysis and advice:

0.  WHY DIDN’T YOU ALREADY KNOW?  This incident is a gigantic wake-up call to inspect, inspect, inspect!  Your unit is your investment – guard it!

A.  The Lease Contract:  The lease is a contract requiring the tenant to pay monthly rent through August, subject to the landlord’s duty to take reasonable steps to re-rent the unit if the tenant bails.

B.  The Security Deposit is the tenant’s money, held by the landlord, as collateral against all actual recoverable damages but subject to applicable law.  That means the security deposit covers all manner of actual recoverable loss – lost rent, property damage (beyond normal wear and tear) and other outstanding allowed charges. 

C.  The Loss:  In this situation, the landlord has lost one-half month’s rent at $880/month, for a total loss of $440.00.  The landlord is not allowed to “double-dip” for the second half of June – Maine law does not allow residential landlords to include an ‘early termination penalty.’

D.  Retaining the Security Deposit:  The landlord is allowed to retain $440.00 if and only if the landlord timely sends notice.

E.  The Notice:  For a leasehold tenant, the landlord must mail, via USPS, a notice to the tenant’s last known address within 30 days unless the lease says something different (which is less than 30 days).

 You astutely ask, ‘Within 30 days of exactly what?’  Unfortunately, 14 MRS § 6033(2)(A) does not say.  The following section, which applies to tenancy at will, say, “21 days after the termination of the tenancy or the surrender and acceptance of the premises, whichever occurs later.”  But that does not apply to a lease, and if the result is longer than 30 days, the lease can’t say that either.  Deep sigh here.

There is NO REASON TO WAIT TO SEND THE NOTICE.  If you miss the deadline, the landlord loses the legal right to retain any of the deposit, no matter how much it is rightly owed by the tenant.

The notice is five lines long.  Here it is:

Dear Tenant:

            I was holding $1,200.00 for security deposit.

            I am withholding $440.00 due to your failure to pay June rent, after applying prorated rent for June 16-30 received from my new tenant.

            I am returning to you $760.00.

                        Love, Your Landlord

Postal Address:
306 Congress Street
Portland, ME 04101

Phone: (207) 358-9853


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