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Linda Asberry (Linda)
Posted on Thursday, May 18, 2000 - 5:43 pm:   

I believe the landlord needs to replace damaged carpet/floor covering from his security deposit. Hopefully he secured a "Pet Deposit" in a sufficient amount to replace the carpets. If not, I would say the landlord needs to write from his own checkbook.

Just my opinion
Tom Joyce (Tomj)
Posted on Thursday, May 18, 2000 - 10:27 am:   

Just to add to it, the tenant had several dogs which never had to opportunity to outside, insured submits a claim for replacement of carpets etc. Common situation in larger cities. What do you think
Linda Asberry (Linda)
Posted on Thursday, May 18, 2000 - 1:53 am:   

I agree with Jim. Knowing the status of the 3 months deposit, then I would, as Jim suggested, be very careful that normal wear and tear was not included in the loss. However, if the renters left greasy hand prints all over the drywall and punched holes in it, then the Insured will be paid for new drywall (or patching) and a new paint job. There will be some items impossible to separate. The area of paint/drywall is just an example. Using your best judgment is all you can do on this one.

Jim Flynt (Jim)
Posted on Wednesday, May 17, 2000 - 6:56 am:   

Harold, since the 1st and last month portion of the security deposit was used for rent, and the tenant was at the time of loss then 60 days in arrears on their rent, and the security deposit (equal to one month's rent) can be used to offset financial loss (failure to pay rent), then I think a different situation applies here.

The Insured would be entitled to retain the security deposit to offset the 2 months rent in arrears, and the insurance company would owe for those damages which can clearly be shown to have been caused by vandalism by the tenant, less the deductible. (I would be careful to separate any sloppy housekeeping or deferred maintenance from vandalism damage however).

The adjuster should NOT offset the insurance settlement by the security deposit.

Thanks for clarifying and updating us.

Linda what do you think? Do you agree?
Harold J. Geoffrey (Stormadjuster)
Posted on Wednesday, May 17, 2000 - 6:35 am:   

Thanks Linda & Jim for your input. For additional clarification, the three months rent represented first, last and a security deposit. This was a month-to-month rental of which no agreement existed other than a verbal one. In South Florida a three-day notice is issued to the tenant prior to commencing the eviction process. The tenant was 60 days late when the 3-day notice was issued. Both the first and last months rent had been used. I appreciate both of your answers and comments.
Jim Flynt (Jim)
Posted on Tuesday, May 16, 2000 - 11:27 pm:   

Harold Geoffrey emailed late this afternoon, asking that I address and answer his coverage question regarding "double dipping."

The position taken by Linda Asberry is exactly the same as the one I take, but I will add some detail in the hope that it clarifies this for Harold.

Harold, I am going to take the "easy way" out here and quote you parts of the answer straight "from the book:" in this case, the book being Property Loss Adjusting, Second Edition, Volume 1 which is the textbook for the AICPCU AIC 35 course. Here is what the book has to say about your question:

"Sometimes, landlords submit losses for alleged "vandalism" caused by prior tenants in an effort to have their insurers pay for repairs to the property before future sale or rental to another tenant."

"These cases typically involve a tenant who leaves without paying all of the past due rent."

"Vandalism by a current or former tenant might be a covered cause of loss. Vandalism by a tenant is covered just as is vandalism by an outsider."

"Although tenants do commit vandalism, losses to landlord's property more often results from more mundane causes, which might be excluded." (Wear and tear, poor maintenance, sloppy housekeeping)

"Tenant abuse claims are demands by landlords for payment for loss caused by renters. Most are for damage resulting from poor maintenance or sloppy housekeeping. No amount of neglect or sloppiness, no matter how severe, amounts to vandalism. Thus, unless the damage gives the appearance of being a deliberate act, such as holes punched in the walls or sinks pulled away from the walls, the damage is probably caused by excluded causes of loss."

Therefore Harold, what you have described seems to me, and to Linda as well, as vandalism and not normal wear and tear.

I agree with Linda that the adjuster should read the lease to see how the security deposit applies and for what. Generally speaking, a security deposit is the landlord's protection against financial damages incurred because of acts or failure to act by a tenant. Generally speaking, it would seem to me that the Insured/Landlord can utilize the security deposit to offset the damages, and as such, the security deposit should be deducted from any insurer settlement.

I would go a step further and determine what the additional 2 months deposit included. Was this pre-paid rent? Was the tenant in arrears at the time he moved out?

I am also bothered by your remark that the tenant moved out after he was issued a "3 day notice." Again, generally speaking, a 30 day notice is required by most leases, and in the absence of a written lease, then most states have Landlord-Tenant Acts which prescribe a notification period. In my experience, something does not smell right here, and if the Landlord removed a tenant with only a 3 day notice, then there is more here than meets the eye.

If you can clarify this last issue, perhaps I can shed more light on what I think should be done.

Finally, without question, the damages are vandalism and not wear and tear. And yes, the security deposit should be deducted from the insurer settlement. You will remember, that one of the primary tenets of insurance is that an insured is not allowed to "profit" under an insurance policy, and to "double dip" by receiving both an insurance settlement and keeping a tenant's security deposit which affords the same purpose as insurance, amounts not only to "double dipping" but to a breach of the insurance concept as well. It might even rise to a level of being considered insurance fraud.

I hope this helps.
Linda Asberry (Linda)
Posted on Friday, May 12, 2000 - 12:23 pm:   

I may be wrong, would have to see the lease or rental agreement to determine what the perimeters of the security deposit covered. In some areas utilities are attached to the property and not to the occupant, i.e. the tenant moves out and the landlord is "stuck" with the unpaid utility bills.

The other two months rent normally are for the "vacancy" period while it is being marketed and/or cleaned if the agreement has not been adhered to by the tenant and it doesn't sound like this one did. Again, what does the agreement say?

What you are describing in no way is normal wear and tear. Cleaning carpets, kitchen appliances and some painting is normal.

What do the rest of you think?
Harold J. Geoffrey (Stormadjuster)
Posted on Friday, May 12, 2000 - 4:14 am:   

Ok, here’s my question. I have a vandalism loss on a duplex. There is a DP-3 in force. The previous tenant had resided in the unit for the last 3 years. There were issued a 3 day notice and decided to vacate the property. Before doing so they vandalized the unit by spray painting the wallpaper, punching the walls in etc. Here are the questions

1. The landlord collected 3 months rent up front; one of those months was a security deposit ($750.00). Should that amount be deducted from the total settlement?
2. How do you define vandalism or normal wear and tear? A certain amount of damage is expected when you rent property, where do you draw the line.

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