-
Evicted Tenants Security Deposit Assignments and Legal Implications
BRP Community,
I want to bring attention to a concerning trend I’ve observed recently and would like to hear if others have encountered similar challenges or have insights into the legal implications.
Lately, there have been multiple lawsuits filed by an LLC specializing in acquiring security deposits from evicted tenants. This LLC approaches evicted tenants, convinces them to assign their security deposits, and subsequently sues both property owners and our management company. Their claim typically revolves around alleged failures by the owner or manager to provide the required 30-day notice before making claims on these deposits. Compounding the issue, our management company often isn’t aware of the assignment and sends notices directly to the tenant, not the LLC.
Adding to the complexity, the LLC in question also functions as a law firm, acting both as plaintiff and attorney in these cases. This dual role raises serious ethical and legal concerns, especially as they pursue legal action against property owners and seek compensation that includes the security deposit, attorney fees, and potentially other court-awarded rewards. In some instances, settlements have been reached to avoid trials, resulting in significant payouts.
Another troubling aspect is that despite ethical reservations, courts have frequently ruled in favor of these LLCs, awarding them substantial sums, sometimes exceeding $7,000.
I would like to discuss the following topics as a community:
-
Shared Experiences: Has anyone else encountered instances where security deposits are assigned to third parties, particularly law firms representing evicted tenants?
-
Legal Feasibility: Is it legally viable to amend lease agreements to prevent the assignment of security deposits to third parties? Has anyone successfully implemented such amendments or addressed this issue through lease language?
-
Legal Strategies: What effective legal strategies or defenses have proven successful in challenging these lawsuits? Are there specific legal precedents or statutes that offer guidance in similar scenarios?
By openly discussing these issues, we can better understand our rights and responsibilities as property owners and managers, and potentially develop strategies to mitigate these risks moving forward.
I’m eager to hear your thoughts and experiences on this matter.
-
-
3 Replies
-
BRP members has anyone who dealt with a similar situation? I am interested in strategies and operation implementation that have been implemented to deal with this matter.
-
This is a new one. There have been several scams in the past or schemes. Should I say in the past by what would be known as credible sources such as law firms, accounting, firms, etc. entities to go after landlords. I’m not quite sure on whether or not this is an ethical breach. We’ll have to speak to our resident landlord tenant attorney, Jonathan For him to answer this from the ethical standpoint, however the key needs to be having a refresher on how to handle security deposits and making sure that property managers are executing and documenting the procedure accordingly and possibly writing some into the lease contract that says if the security deposit is Assigned or transferred that written notice needs to be provided to the property management company/ownership. However, some leases, including ours may already have languages about assigning security deposits I’ll look into this further.
-
This reply was modified 1 month, 4 weeks ago by Bryan Chavis.
-
This reply was modified 1 month, 4 weeks ago by
-
I spoke with Bryan about this today. I agree with his approach on how to avoid getting caught up in this type of situation. I look forward to speaking with you on the phone to discuss this further.
Log in to reply.