I was managing a property, and the property management agreement is terminating today. A tenant in the property previously notified us that he will not renew the lease. The lease ends 30 days from today. I have the security deposit in my trust account. What do I do with the security deposit?
The security deposit is a deposit given by the tenant to the landlord as security for the tenant's performance under the lease. The landlord must account to the tenant for the deposit at the end of the lease. When the Residential Leasing and Property Management Agreement (TXR 2201) terminates, paragraph 7(c)(2) states that the property manager returns the security deposit, less deductions authorized by the agreement, to the landlord and provides the tenant with a written notice stating 1) the property management agreement has ended, 2) the exact dollar amount of the security deposit, 3) the contact information for the owner, and 4) a statement that the owner is responsible for accounting for and refunding the deposit to the tenant. If the property manager complies with the above provisions, the landlord indemnifies the property manager from any claim or loss relating to the return of the security deposit to the tenant.
One important note: Always send written notices to the landlord and tenants by certified mail especially when it concerns the security deposit.
Could we get a TAR attorney to comment on whether or not the security deposit should be held by the Landlord or the property manager…?
I would send the owner a form TAR-2210 and have him sign it. It is the NOTICE TO TENANT OF CHANGE IN MANAGEMENT AND ACCOUNTABILITY FOR SECURITY DEPOSIT.
It gets the money monkey off your back. Let the owner deal with the deposit and the tenants possible dispute. This will lower your liability and eliminate your stress level even more.