I received a call on how a sales person’s buyer’s deposit gets returned from the buyer’s landlord.  Deposits can be confusing.

When a Rental is Sold and the Tenant Remains.

If the sale is of a property that is leased, the landlord (seller) must either return the deposit to the current tenant or inform the tenant that the new landlord (buyer of investment property) is now in possession of the deposit.  The tenant must be informed of the name, address and telephone number of the new owner. [NRS118ASec244]

When Your Buyer is Requesting Deposit from Their Landlord. 

If your client is a tenant that just vacated and is asking you how she can get her deposit back, the rules are as follows. The landlord must provide an itemized 30 day statement to the tenant within 30 days after the end of a tenancy.  Here is an example [FORM].  This must be received by the tenant not later than 30 days after the tenant has surrendered the keys/terminated the tenancy.  Within this form the landlord can deduct those reasonable costs of damages affecting the rental property that are beyond normal wear.  [NRS118ASec242]  That is a phrase that is easier said than done.

 As 1964, Supreme Court Justice Potter Stewart once said, ‘I know it when I see it…’  Mere scuffs and the need to paint to help a place look brighter is not beyond normal wear, and not the tenant’s cost, but holes and stains and broken items typically are deducted as would any outstanding charges for rent.  Once the landlord serves the itemized statement, “by handing it to him personally at the place where the rent is paid, or by mailing it to him at his present address; or if that address is unknown, at the tenant’s last known address,” which can mean the very rental location. The only recourse for the tenant is a legal claim.  If the deposit is less than $5,000 the jurisdiction is within the small claims system.  Depending where the property is located; Henderson, Las Vegas (including County), or North Las Vegas, the tenant can file a small claims action to address any alleged improper holding of deposits.

Recently a question came up where a buyer terminated their lease early so that they could purchase their own home.  This is not however a valid reason to breach a lease.  Nor is the selling of a property a valid reason to terminate a lease if you are the owner of a rental property.  Leases, “run with the land.” which means that subsequent owners are restricted by the contract.  If the Seller or Tenant would like to end the lease early they should contact the other party and attempt to work out a lease termination or modification.

Secirty deposits are not accessible by creditors of tenants [Nevada Supreme Court Opinion] and the claim of a tenant to security to which he is entitled under Nevada landlord tenant law takes precedence over the claim of any creditor of the landlord. (NRS 118A.242(6)).