Security Deposit

[tknj99]

Hi all,
In alittle dilemma. Attorney advised me not to collect any more rent and I am no longer doing that and the 2 properties (1 actually bounced a check on me anyways) - The second tenant is a tax lawyer and wanted to get his security deposit back. I told him that im keeping it as a paid rental payment. And when he started talking about how its for damages etc, I told him, OK then pay me in July and i'll give it right back to you. He finally realized that he'll be living there for free and wants to try to do a short-sale with the bank. He now, wants me to sign an agreement that im keeping his security deposit in lieue of not collecting any rent. Im alittle worried about this. Do you think that signing an agreement like this could cause an issue when the trustee reviews the case? If you dont collect rent yet have a valid lease, how do u explain the not collecting rent part - do u have to tell the trustee that they stopped paying or can u say that you didnt want to have extra income for the means test? (im sure the latter prob isnt something you'd wanna say to the trustee though)

thx for the help.

[atolar]

not sure what I would. probably collect the rent and not put it in the bank. cash it and then give him back his security deposit.

ask your attorney. though, he is entitled to his security deposit if he leaves the house in a clean condition. is he gonna try to buy your house through short sale?

[bellessima]

I have 2 properties that are not in foreclosure yet and am still collecting the rent and not paying the lender.

Should I just cash the checks and not disclose that income?

Will I have to account for where it was spent?

Now I am confused. Filing chapter 7 in December.

How should the rent monies be handled?

Thank you for you help.

[tknj99]

Hi Bellissima,
At this point for me, all of my 3 rentals are in the courts with foreclosures pending. What I did was to continue collecting the rent until my attorney instructed me not to. Basically, he said we'd be filing sometime in December so I could collect thru the month of June so that the 6 months income prior to filing wouldn't include rent. He also said to not return any security deposits as they are kept in lieu of rent.
Also, you can stop paying the maintenence fees as well but from what i've heard you would have to pay them starting again after you file unless the foreclosure is complete and the bank has title prior to filing..
Hope that helps..

[AngelinaCatHub]

TNK, sign nothing. He is playing intimidation on you. He knows he can get free rent. You are holding his ace in that hole. Now, upon his last current month when he would normally be due to pay you, simply make a receipt for rent for that month. (Make a copy). You are the boss at this point. 'Hub

[tknj99]

I spoke with him the other day after he told me he got served. Being a lawyer himself (tax lawyer), he told me that he feels obligated to file a response of "no claim" to the court but still wants to draft a letter stating that im not collecting rent from him and keeping his deposit. I again told him that i'll speak to my lawyer. If he does email me anything im just gonna stall him until at least 20 days pass. Im not gonna sign anything from anyone!
Your right - for too long i was always the "nice guy" and did whatever my tenants wanted to keep them happy, but those days are over...
Ya know.. he actually had the gall to ask me to give him half of the money he spent in trimming trees in the yard. When i told him "no" he was like, well it doesnt hurt to ask..

[AngelinaCatHub]

I spoke with him the other day after he told me he got served. Being a lawyer himself (tax lawyer), he told me that he feels obligated to file a response of "no claim" to the court but still wants to draft a letter stating that im not collecting rent from him and keeping his deposit. I again told him that i'll speak to my lawyer. If he does email me anything im just gonna stall him until at least 20 days pass. Im not gonna sign anything from anyone!
Your right - for too long i was always the "nice guy" and did whatever my tenants wanted to keep them happy, but those days are over...
Ya know.. he actually had the gall to ask me to give him half of the money he spent in trimming trees in the yard. When i told him "no" he was like, well it doesnt hurt to ask..

If he is truly a lawyer, he himself is not doing too well to ask for pennies. Hell a kid would take 3 bucks to do what he did.

Anyway, he is required to give or have the Court give you any correspondence. You are the one with the money in your possession. KEEP IT, and give him a receipt, then tell him "thank you, you were a nice guest". and "kill him with kindness". What can he do? Take you to small claims over what? If he does, he can only get a Judgment on what? You are bankrupt. LOL 'Hub

[bellessima]

Hi Bellissima,
At this point for me, all of my 3 rentals are in the courts with foreclosures pending. What I did was to continue collecting the rent until my attorney instructed me not to. Basically, he said we'd be filing sometime in December so I could collect thru the month of June so that the 6 months income prior to filing wouldn't include rent. He also said to not return any security deposits as they are kept in lieu of rent.
Also, you can stop paying the maintenence fees as well but from what i've heard you would have to pay them starting again after you file unless the foreclosure is complete and the bank has title prior to filing..
Hope that helps..

Thank you for your reply.
My foreclosures have not started nor have I received any notices from the lender. I wanted to file in December but that would show the rental income in the look back 6 mos
statements.

My tenants are still paying me and are not aware of this yet.
I don't really want to tell them. How did you handle this issue? were your tenants aware?
thanks

[gowiththeflo]

I have the same questions... to tell or not to tell? to notice them or not to notice them? any advice?

[hereforinfo]

Should I just cash the checks and not disclose that income?

Sure, if you want to go to jail.

[bellessima]

Sure, if you want to go to jail.

I am not looking to do anything illegal here ......thanks...however, can I use the money to purchase cashiers checks to pay my mortgage after the filing? as I need to spend this income!

[hereforinfo]

If you collect rent, you have to disclose that income regardless of whether you cash the checks or deposit them. If you cash the checks and save a wad of cash, you have to be honest in your filing and disclose that money as well. If you hide it, you will get caught.