Landlord-Tenant: Much Ado About Security Deposits.

Posted By Cliff Tuttle | September 28, 2008

Posted by Cliff Tuttle

What happens when a landlord gives back a tenant’s security deposit and subsequently sues for damages? Thirty days have passed and no list of damages was given by the landlord to the tenant. Does this failure to provide a list of damages bar recovery pursuant to Section 512(b) of the Pennsylvania Landlord and Tenant Act of 1951?

Section 512(b) states:

“(b) Any landlord who fails to provide a written list within 30 days as required in subsection (a), above, shall forfeit all rights to withhold any portion of sums held in escrow, including any unpaid interest thereon, or to bring suit against the tenant for damages to the leasehold premises.”

Seems pretty clear, doesn’t it? No list – no suit!

Read on.

These circumstances arose in Allegheny County Common Pleas Court, in the case of Bonfield v. Cassler, 16 D&C. 3d 716 (1980), decided by Judge R. Stanton Wettick. Judge Wettick held that the failure of the landlord to give notice under these facts did not preclude recovery.

Judge Wettick reasoned that the 30 day list requirement was not intended by the Legislature to apply to a landlord who had already given back the security deposit. Reading Section 512 (a) (b) and (c) together, he stated, indicated that the intention of the statute was to assure that tenants either received a list of damages or the security deposit in 30 days. The prohibition against suit, read in the context of the entire section only made sense when the landlord was keeping the security deposit. Now read the entire section:

“(a) Every landlord shall within 30 days of termination of a lease or upon surrender and acceptance of the leasehold premises, whichever first occurs, provide a tenant with a written list of any damages to the leasehold premises for which the landlord claims the tenant is liable. Delivery of the list shall be accompanied by payment of the difference between any sum deposited in escrow, including any unpaid interest thereon, for the payment of damages to the leasehold premises and the actual amount of damages to the leasehold premises caused by the tenant. Nothing in this section shall preclude the landlord from refusing to return the escrow fund, including any unpaid interest thereon, for non-payment of rent or for the breach of any other condition in the lease by the tenant.

“(b) Any landlord who fails to provide a written list within 30 days as required in subsection (a), above, shall forfeit all rights to withhold any portion of sums held in escrow, including any unpaid interest thereon, or to bring suit against the tenant for damages to the leasehold premises.

“(c) If the landlord fails to pay the tenant the difference between the sum deposited, including any unpaid interest thereon, and the actual damages to the leasehold premises caused by the tenant within 30 days after termination of the lease or surrender and acceptance of the leasehold premises, the landlord shall be liable in assumpsit to double the amount by which the sum deposited in escrow, including any unpaid interest thereon, exceeds the actual damages to the leasehold premises caused by the tenant as determined by any court of record or court not of record having jurisdiction in civil actions at law. The burden of proof of actual damages caused by the tenant to the leasehold premises shall be on the landlord.”

Judge Wettick observed that the statute made available a penalty against the landlord (double net damages) when the landlord keeps the money for damages without providing the list. But if the security deposit is relinquished in the thirty days, the purpose of the statute has been fulfilled. So, if the landlord delivers either the deposit or the list, there is no penalty.

Okay, but what happens if the security deposit is $100.00 and the damages are $1,000.00? Once again, the landlord fails to give written notice of damages within 30 days. But he also keeps the deposit. Does the holding in Bonfield v. Cassler apply here?

Yes, Judge Wettick decided this case, too. See Taylor v. Fitzhenry, 48 Pa. D&C. 3d619 (1987). His analysis is a bit complex, but no one can state it better. Moreover, any lawyer venturing into Judge Wettick’s courtroom to argue about security deposits is in serious danger if he or she has not mastered Taylor v. Fitzhenry. The opinion states:

“We recognize that the language of subsection 512(b) forfeiting the right of the landlord who fails to provide a written list “to bring suit against the tenant for damages to the leasehold premises” suggests that the landlord who fails to provide a written list may not sue the tenant for any damages to the leasehold premises. But the language of subsection 512(c) making the landlord liable for ‘double the amount by which the sum deposited in escrow . . . exceeds the actual damages to the leasehold premises’ suggests that the landlord who retains the security deposit and fails to provide a written list may fully defeat the claim of a tenant for the return of the security deposit by proving actual damages to the leasehold premises in an amount equal to or in excess of the security deposit. Such a result would provide very little incentive to a landlord to furnish a written list of damages to the tenant because the landlord who fails to do so would be treated in almost the same manner as the landlord who provides the written list. Both classes of landlords could defeat a claim for the return of the security deposit by showing that the tenant caused damages in an amount at least equal to the amount of the security deposit. Both classes of landlords would be liable for double the amount of proceeds withheld in excess of actual damages to the rental premises. Under this construction of section 512, the only difference between these classes of landlords would be that the landlord who provides the written list may sue for damages to the leasehold premises in excess of the amount of the security deposit while the landlord who fails to provide the written list cannot do so.

Landlords obtain security deposits because they do not expect to be able to collect a judgment from a tenant after the premises are vacated, so we would be giving very little incentive to the landlord who keeps the security deposit to provide a written list of damages to the tenant if the only penalty for the failure to provide the written list is forfeiture of a right to sue the tenant. As we discussed in Bonifield v. Cassler, supra, section 512 was intended to protect tenants by requiring landlords who keep security deposits as payment for damage to the leasehold premises to provide written lists of damages. This can be achieved only by construing section 512 in a manner that provides a remedy to the tenant whenever a landlord who keeps any portion of the security deposit for this purpose fails to furnish a written list of damages.

We can accomplish this result if we construe subsections 512(b) and 512(c) in a manner which gives primary emphasis to the portion of subsection 512(b) which states that the landlord who fails to provide the list ‘shall forfeit all rights to withhold any portion of sums held in escrow.’ If this portion of subsection 512(b) is intended to provide for the return of the full amount of the security deposit whenever the landlord fails to provide the list, then the subsequent portion of subsection 512(b) forfeiting the landlord’s right ‘to bring suit against the tenant for damages to the leasehold premises’ is intended only to prevent the landlord from raising a claim for damages to the leasehold premises for purposes of defeating the tenant’s claim for the return of the security deposit. If we construe subsection 512(b) in this fashion, we can then construe subsection 512(c) as permitting evidence of damages to the premises to be introduced only for purposes of barring the claim for double recovery. Illustration: The landlord did not provide a list of damages and withheld a $ 1,000 security deposit as payment for damages to the premises. The tenant sues for double the amount of the security deposit under subsection 512(c). The landlord shows actual damages to the premises of $ 900. The tenant is entitled to keep the full amount of the security deposit because of the landlord’s failure to provide a list of damages ($ 1,000) plus a partial double recovery in the amount of the security deposit ($ 1,000) less actual damages ($ 900) for a total recovery of $ 1,100.

Under this construction of subsections 512(b) and 512(c), a landlord who keeps the security deposit and fails to provide a written list may sue for damages to the leasehold premises but may not defeat a tenant’s counterclaim for the amount of the security deposit by showing damages to the premises. Illustration: The landlord did not provide a list of damages and withheld a $ 1,000 security deposit as payment for damages to the premises. The landlord, who continues to retain the security deposit, sues for damages to the premises in the amount of $ 10,000. The tenant counterclaims for double the amount of the security deposit. If the landlord proves actual damages to the premises of $ 10,000, the landlord will recover this full amount on his or her claim for damages to the premises. The tenant will recover $ 1,000 on his or her claim for the return of the security deposit because the landlord kept the security deposit and failed to provide a list of damages.”However, the tenant’s claim for double recovery will be defeated because the actual damages exceed the amount of the security deposit. Consequently, the landlord’s total recovery will be $ 9,000.

This construction of section 512 gives meaning to the forfeiture provision of subsection 512(b). It gives incentive to the landlord to provide a written list of damages in every case. It provides a uniform remedy for failure to provide a written list of damages of the amount of the security deposit that was withheld for payment of damages to the premises.

Finally, this construction of section 512 avoids a result which is unreasonable and inconsistent with the legislative purposes. The legislature could not have intended to permit a tenant who destroyed a $ 100,000 premise to defeat a damage claim by showing that the landlord had retained a $ 100 security deposit and had failed to provide a written list of damages. See Secretary of Revenue v. John’s Vending Corp., 453 Pa. 488, 309 A.2d 358 (1973), where the court stated, ‘In order to avoid an absurd and harsh result, a court may look beyond the strict letter of the law to interpret a statute according to its reason and spirit and accomplish the object intended by the legislature.’ The purpose of this legislation was not to reward those tenants who caused the most destruction to the premises. To the contrary, the provisions of subsection 512(c) barring double recovery to the extent that actual damages were sustained show that the legislature intended to give greater protection to the tenant who did not damage the premises.”

In my example above, where the security deposit was $100.00 and the damages were $1,000.00, Judge Wettick would award the tenant the security deposit of $100.00 (because the list of damages was not given) but no double damages. The landlord would also be able to counterclaim for $1,000.00. So the net recovery by the landlord is $900.00. This penalizes the landlord for not providing the list, but still permits a recovery of actual damages.

Are these two cases the law in Pennsylvania? Probably not — at least not yet. To my knowledge, Taylor v. Fitzhenry has not been cited in any published opinion. I doubt whether Magisterial District Justices, who hear the overwhelming majority of such cases, are inclined to interprete Section 512 (b) any way but literally. That having been said, if you are representing a landlord, one or both of these cases, with the finely tuned arguments of one of the best judges on the bench, may help keep you from being shut out from recovering damages.

CLT

Welcome

CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

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