Saturday, July 6, 2013

More on Kentucky's residential security deposits

The meaning of 'security deposit' within the framework of Kentucky's Uniform Residential Landlord and Tenant Act (URLTA) is extremely limited. It is confined to, "securing the landlord against financial loss due to damage to the premises occasioned by the tenant's occupancy other than ordinary wear and tear" K.R.S. §383.545 (13). In actual practice, Kentucky landlords think of rental security deposits as covering much more than just physical damage to the leased residential premises.

In property law, for example, surrendering the keys to a residence has great symbolic importance as an indicator of relinquishing possession. In practice, many tenants just move out and don't bother returning the keys. When this happens, simple prudence may require the landlord to incur the expense of changing the locks on the doors for the security of the next tenant, and the idea of a 'key deposit' is born. It also sometimes happens that a tenant will leave the premises in a filthy mess with assorted junk left behind that the landlord must have hauled off and disposed, or the carpets must be professionally steam cleaned. Pet deposits and cleaning deposits are not unheard of concepts, even if the financial damage to the landlord is not strictly physical damage to the premises. In actual practice, the various tenant obligations a landlord believes are secured by a deposit may be ambiguously rolled up into a single 'security deposit' and the technical niceties of the statute are completely overlooked.

The online comments of the Uniform Law Commission show the path forward.
" . . . . the basic approach was to eliminate all elements of outmoded 'common law' from the landlord-tenant relationship and base all phases of the rental agreement on contract law."
The specific provisions of the URLTA are not the beginning and the ending of landlord - tenant relations, they are just the beginning. While preserving the URLTA's treatment of security deposits as escrows, a more comprehensive elaboration of the terms of the security deposit escrow should be subject to the parties' express agreement. If so, it is merely a drafting problem for the rental agreement, to expand upon the statutory provisions without contradicting or offending them.
"A landlord and a tenant may include in a rental agreement terms and conditions not prohibited by KRS 383.505 to 383.715 or other rule of law, including rent, term of the agreement, and other provisions governing the rights and obligations of the parties."
K.R.S. §383.565(1)