Legal Question in Landlord & Tenant Law in California
I sign a contract with a Property Management Company to manage a rental which I own. Before moving in, the tenant had to sign a one year lease and pay the first month rent plus a Security Deposit. The Management Company kept the Security Deposit in Escrow. About 8 months into the lease, the company went out of business and the Security Deposit was never returned to either the tenant or myself. Attempts to contact the property management company were unsuccessful.
My question is, when the tenant moves out, am I responsible to return the tenant the Security Deposit fee or since he gave that money himself to the Property Mgmt. Co. is he responsible for trying to recover his Security Deposit fee?
thank you
2 Answers from Attorneys
The tenant turned the money over to the Management Company because they correctly believed that the Co. was authorized to accept the security deposit and they were required to give it to the Co. and not you. What did the tenant do wrong? there was nothing the tenant could do to prevent the loss of the deposit; perhaps you could have required the Co. to put the money in a secured account, etc. Between the two of you, to whom would it be most unfair to assign the loss? Clearly the tenant is entitled to get the deposit back and you will have to pay it to the tenant.
It is a lot simpler than Shers makes it seem. The property management company was your authorized agent. Everything they did was in your name and you are responsible for it. You owe the deposit.
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