Friday, July 19, 2013

Before and After. Residential Tenant Security Deposits

What system does Kentucky's enactment of the Uniform Residential Landlord and Tenant Act (URLTA) provide for documenting tenant-caused damages to the premises, and why do I always refer to "Kentucky's enactment" of the URLTA, and not just the URLTA?

The second question is first, and my answer is another question. What are the odds that Kentucky enacted the URLTA exactly as the Uniform Law Commission presented it, with zero tweaks, and it is just the same in Kentucky as it is in any other state that has adopted it? The answer is, I don't know and I don't like to gamble.

The easy way to answer the first question is to quote K.R.S. §383.560(2) - (3)
(2) Prior to tendering any consideration deemed to be a security deposit, the prospective tenant shall be presented with a comprehensive listing of any then-existing damage to the unit which would be the basis for a charge against the security deposit and the estimated dollar cost of repairing such damage. The tenant shall have the right to inspect the premises to ascertain the accuracy of such listing prior to taking occupancy. The landlord and the tenant shall sign the listing, which signatures shall be conclusive evidence of the accuracy of such listing, but shall not be construed to be conclusive to latent defects. If the tenant shall refuse to sign such listing, he shall state specifically in writing the items on the list to which he dissents, and shall sign such statement of dissent. 
(3) At the termination of occupancy, the landlord shall inspect the premises and compile a comprehensive listing of any damage to the unit which is the basis for any charge against the security deposit and the estimated dollar cost of repairing such damage. The tenant shall then have the right to inspect the premises to ascertain the accuracy of such listing. The landlord and the tenant shall sign the listing, which signatures shall be conclusive evidence of the accuracy of such listing. If the tenant shall refuse to sign such listing, he shall state specifically in writing the items on the list to which he dissents, and shall sign such statement of dissent.
Answering the first question begets the next question: What the hell does this mean?

Clearly, the intention is to document the condition of the premises at the beginning of the tenant's occupancy and then again at the end of occupancy; and to give the tenant the opportunity to either agree or disagree with the landlord's assessment of each, and to make a record of any disagreement .

The procedure in the statute strikes me as antiquated and excessively clunky, but I will not go into the details as to why I think this. Here in the 21st Century when digital photography is cheap, easy and ubiquitous, simply photographing any preexisting damage and having both parties to sign off on the collection of photos would be sufficient to substantially satisfy the spirit and intention of the URLTA, while ignoring the literal requirements of the section. This is my opinion only.

There is not an abundance of Kentucky caselaw on the subject.

Never mind, I take it back. It's not a good idea to blatantly ignore the clear language of a duly enacted law in the Commonwealth of Kentucky. It's not a good habit to get into. But the statutory language, "estimated dollar cost of repairing such damage," is difficult to implement in practice.

Obviously, if the estimated repair cost of damage existing at the beginning of a tenancy is the same as the estimated cost of repair at the end of a tenancy, then the tenant did nothing to elevate the repair cost during the tenancy. But the reverse is not necessarily true.

Estimating repair costs is difficult and inexact. It is difficult and inexact for a landlord, and it is even more difficult for a tenant. The fact of the matter is that the landlord opted not to have the existing damage repaired and the tenant chose to enter a rental agreement and occupancy with knowledge of the existing damage.  It is very likely that two different people at two different times would come up with two different estimates for the cost to repair the exact same damage.

There are two separate related questions. Did the tenant damage the premises during the course of the tenancy and how much should the landlord be compensated for this damage.

Before and after photographs of the premises would be very useful to avoid or resolve landlord tenant disputes about damages. This would be in addition to the clunky mechanism provided by statute.