Can Landlords Keep Security Deposit if Tenant Dies?

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A Scottsdale, Arizona man made news last week after his wife died in her apartment and her landlord then refused to refund her security deposit. Many people were surprised to learn that according to most state’s landlord and tenant laws, landlords are legally allowed to retain a security deposit if a tenant passes away and essentially “breaks” their lease agreement.

However, landlords can make the choice refund the deposit to the deceased tenant’s estate if they want. The funds would then become available for claim by the former tenant’s next-of-kin through probate court. In the case of the Scottsdale man, he cleaned out his wife’s apartment and made sure it was left in pristine condition so the landlord wouldn’t have an obvious reason to withhold the deposit. Once a local media outlet picked up this story, the property management company issued a statement saying they planned to refund the deposit once they received probate information.

Perhaps this situation would have been perceived differently if the landlord had been stuck with footing the bill for cleaning out the rental unit and having to remove the deceased tenant’s belongings. That type of job could be costly, and perhaps a more justifiable excuse for withholding the security deposit.

The easiest way to avoid this type of hurdle in the future would be for tenant’s to name a security deposit beneficiary on their lease agreement. Obviously, this is not something many tenants and landlord’s consider when they sit down and hash out a property rental agreement. Perhaps it’s something you might want to consider suggesting at the time of a lease signing, especially if your tenant is older or has known health concerns.

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