Landlord-Tenant security deposit disputes; 68 P.S. 250.512; Thirty day time limit;

I previously summarized the factors that cause landlords to get into needless trouble in security deposit disputes. One such factor is deception by the tenant. The basic rule is that a landlord must either (1) provide a written list of damages or (2) return the security deposit to the tenant within thirty (30) days of the tenant leaving the property.

Landlords sometimes get tripped up when tenants tell the landlord to take forty-five (45) days (instead of the statutory thirty (30)). Tenants do this when they know that there is substantial property damage and that the landlord will not voluntarily return the deposit.

Just because the tenant tells the landlord that 45 days is acceptable does not mean that the courts will find it acceptable also. Tenants often know the law better than landlords. Tenants will try to trick the landlord into waiting beyond the required thirty day period so that the tenant can force the return of the security deposit and avoid having to pay for the property damage. Courts will be unsympathetic to the landlord even when the landlord's delay results from the tenant's unsolicited inducement to take more time.

Remember, it does not matter what the tenant says. Provide your written list of damages within thirty (30) days no matter what.

February real estate sales decline; National Association of Realtors; increasing inventory of unsold homes.

The National Association of Realtors has published the latest real estate sales data:

Sales of existing homes fell for a third straight month in February, pushing sales down to the lowest level since last July. There is concern the fragile housing rebound is faltering, making it harder for the overall economy to recover.

The slowdown itself is creating more downward pressure on prices:

Last month, the inventory of unsold homes jumped by 312,000 to 3.59 million, an unusually large increase that pushed the supply of unsold homes to 8.6 months.

Lawrence Yun, chief economist for the Realtors, called that increase "discomforting" and said if it climbs above 10 months supply it could put significant downward pressure on prices.

Previous - 2009 predictions for housing prices.
Competing factors affecting real estate prices.

68 P.S. 250.512; Security deposit disputes in Pennsylvania; Thirty day letter; contractor estimates.

Previously I have written that landlords often fall into traps by failing to return security deposits or provide a list of damages within 30 days of the tenant's departure from the rental property.

I have also pointed out the consequences to the landlord from failing to provide the list of damages in a timely manner.

Landlords often say that it took too long to get an estimate of the damages from their contractor. While that may be true, waiting for the actual estimate before sending the "30 day letter" is a bad idea. Many courts will enforce the penalties against the landlord even when the landlord is legitimately trying to get accurate information to provide in the letter.

It is unnecessary for a landlord to lose a security deposit dispute for this reason. If the landlord does not yet have an actual estimate, he can simply list the damaged items in the house in a letter to the tenant. The landlord can inform the tenant that the security deposit will not be returned because the damage exceeds the deposit (provided that is true). The landlord need not provide an exact dollar amount for the actual repair bill. (The landlord will need estimates (and perhaps live testimony) by the time of any hearing, but the rules of evidence do not apply to writing the 30 day letter.) The statute provides such a short response time, it is better to simply write whatever information is available without waiting for further detail.

Harrisburg Flood Plains

Harrisburg City has posted a map of the 100 year and 500 year flood plains.

Harrisburg appears to have escaped this year's flood season (and will probably not face another 100 year flood for many years), but this information is worth knowing for real estate investors. The existence of these plains helps determine insurance requirements and rates.

Youngstown film points out real estate issues affecting Harrisburg properties.

I found the following nine minute film on Youtube. It was filmed in Youngstown (a short commute from Pennsylvania's western border) this winter. The narrator's comments should sound familiar to Harrisburg investors, as the film touches on many issues that we deal with here. I noted a few points while watching this:

• Out-of-town investors usually pay too much for properties. New York real estate is far more expensive than real estate in Harrisburg or other smaller cities. Being unfamiliar with Harrisburg, a New York investor will have little basis to compare prices when he is confronted with a seemingly "good deal" at a price far below what the market would bring in a larger city. Experience with the local market is the important factor - not necessarily "touching" or "seeing" the property as the narrator stated.


• I am guessing here, but I would bet that the second property in this film is so cheap because there is some title defect preventing its sale at market prices. The property has probably been through a tax sale at least once (the narrator made reference to a company that buys tax liens). Without spending the money necessary to resolve this title defect, the owner cannot get a loan to make needed repairs. Properties that come with a sale price of "$1,000" usually also come with another price - unknown attorney fees necessary to clean up title defects.


• Appraisals often mean nothing. The narrator mentioned an $82,000.00 appraisal for the house that was listed at $1,000.00. I haven't seen the appraisal, but I imagine that any such document relied on completely irrelevant comps and/or failed to account for the title defects.

When we see these issues out of the context of our own neighborhoods and properties, we can look at them with a more objective eye.

Security deposit disputes and forwarding addresses under Pennsylvania Landlord-Tenant law; Landlord and Tenant Act of 1951; 68 P.S. 250.512(e).

In a previous post, I pointed out that many landlords fall into a trap by failing to send a letter itemizing damages within thirty days of a tenant vacating the premises.

Many landlords fail to send the "thirty day letter" because the tenant does not provide a forwarding address. The statute does require the tenant to provide a forwarding address in writing and relieves the landlord of all liability in the absence of such a written forwarding address. 68 P.S. 250.512(e).

Regardless of the above statute, the tenant will lie about having provided a forwarding address and may even backdate a letter for use in court. Courts often believe a tenant when there is a dispute over whether or when a letter was sent.

Most importantly, this issue is so easy to avoid. If the landlord does not have a forwarding address, the landlord should mail the thirty day letter to the rental unit in question via certified mail. If the former tenant fails to sign for the mailing, the landlord will have proof, in the form of the returned mail with the "refused" stamp from the post office, that the tenant left no forwarding address and resisted the landlord's attempts to comply with the statute. While this action goes beyond the requirements of the statute, it would preclude a tenant from succeeding on a falsified claim of having provided a forwarding address.

Pennsylvania wage attachment for landlords

Over the past 15 years, Pennsylvania has gradually developed procedures to allow a landlord to attach the wages of a tenant that has failed to pay rent or has damaged the property. These procedures are not generally known, but they can be effective on occassion.

I will provide more detail in future posts, but the basic points to remember are as follows:

• Know where your tenant works, including the name of the company and the address;
• Do not ask the District Justice who is holding your eviction hearing, "How do I attach the tenant's wages?" They do not give legal advice and the wage attachment process is not part of the District Justice's duties.

If you remember these points, you should be able to receive payment through wage attachment in many cases.

Detroit consolidation update.

Last week's story of the City of Detroit being "downsized" has been updated in The Washington Times:

Operating on a scale never before attempted in this country, the city would demolish houses in some of the most desolate sections of Detroit and move residents into stronger neighborhoods. Roughly a quarter of the 139-square-mile city could go from urban to semi-rural.

Near downtown, fruit trees and vegetable farms would replace neighborhoods that are an eerie landscape of empty buildings and vacant lots. Suburban commuters heading into the city center might pass through what looks like the countryside to get there. Surviving neighborhoods in the birthplace of the auto industry would become pockets in expanses of green.

This ongoing story is worth watching by everyone in the Eastern United States for the following reasons:

• Detroit's deterioration has advanced beyond that of other cities (including Pennsylvania cities) only by a matter of degree.
• City planners are going to make a serious attempt to implement this plan, but the result will not be picturesque farms where once stood blight.
• At some point this decade, Detroit will be mired in lawsuits related to eminent domain and the validity of disputed title claims (as well as protests, demonstrations and civil unrest resulting from forced relocations).
• It is likely that clouded title resulting from a history of tax sales has created uncertainty as to the true ownership of so much Detroit real estate (sound familiar?) and worsened the blight that this proposal is attempting to remedy.

Wherever blight and depopulation exists on a large scale, forced relocation, consolidation (and resulting litigation) will become an option for city planners.

Flood potential for Juniata, Conemaugh and Youghiogheny river basins; nondisclosure issues

Last month I commented on the potential for spring flooding following the heavy snow experienced by Pennsylvanians this winter, especially in Western Pennsylvania. I presented this issue in the context of the real estate issues that arise as a result of flooding, especially disclosure issues.

While it appears that the worst case scenario will not happen, NOAA has now forecast a potential hazard for later in the week near smaller waterways in Western and Central Pennsylvania:

RAINFALL TOTALS OF UP TO 2 INCHES ARE POSSIBLE OVER A 48 TO 72 HOUR PERIOD FROM LATE THURSDAY THROUGH SATURDAY. THE COMBINED SNOWMELT AND RAINFALL COULD CAUSE SOME STREAMS AND CREEKS TO RISETO NEAR BANK FULL...ESPECIALLY THOSE RUNNING THROUGH THE JUNIATA...CONEMAUGH...AND YOUGHIOGHENY RIVER BASINS OF SOUTHCENTRAL AND SOUTHWESTERN PENNSYLVANIA. WATER EQUIVALENTS OF 2 TO 3 INCHES STILL EXIST IN THE DENSE SNOW PACK ACROSS THEWATERSHED AREAS OF THESE RIVERS.

This news will most likely affect the average person, if at all, only in purchasing low-lying real estate near those rivers (and the creeks that feed them). Any flood damage will likely be limited to standing water closer than normal to structures (or possibly basement seepage).

Such damage will probably no longer be visible in a week or so, but the disclosure of such an event will be important for any future transactions. If you think you might purchase affected property at any time in the future, visit these areas this weekend and note the general water levels. Ask specifically about this event when the time comes to purchase any such property. Compare the answers with your own observations from this coming weekend.

Juniata River and tributaries (from Wikimedia)

















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Update - 3-14-10 Click here for the story of the actual minor flood events in Cumberland, Perry and Franklin Counties.

Pennsylvania Landlord-Tenant security deposit disputes; forwarding address; damage estimates; Pennsylvania Landlord-Tenant Act.

For landlords, the question of what to do with a departing tenant's security deposit might seem minor, but can create unnecessary headaches and expenses.

If you have reason to keep ANY of the deposit, make sure you provide a list of damages to the tenant as soon as he moves out (or as soon as you THINK he might have moved out). Be as cautious as you can. Even though the Pennsylvania Landlord-Tenant Act gives you thirty days and requires the tenant to provide a forwarding address, play it safe and send your letter without waiting. Do not use the following excuses:

• The tenant did not provide a forwarding address.
• It took longer than 30 days to get an estimate of the damage.
• The tenant said that the landlord could wait longer than 30 days.
• The tenant did not give me a key.
• I thought that the tenant was gone, but he did not provide "official" notice.
• The constable said I did not have to send a letter.

In future posts, I will debunk each of these reasons. Remember that courts often are sympathetic to a tenant even though the tenant is lying. Courts often disregard statutory time limitations where such limitations harm a tenant, but will strictly enforce such time limits against a landlord.

It is easy to win a security deposit dispute if you follow a few simple guidelines. Treat every security deposit dispute as if a court will eventually resolve all doubt in favor of the tenant, and you should avoid serious expense and inconvenience.

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Update - click here for more detail on dealing with the lack of a forwarding address and 68 P.S. 250.512(e).
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Update - click here for more detail on dealing with delays in assembling contractor estimates.
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Update - click here for more detail on situations where the tenant agrees to give the landlord more than thirty (30) days.

Record low for home sales in January

From the AP last week:

Sales of new homes plunged to a record low in January, underscoring the formidable challenges facing the housing industry as it tries to recover from the worst slump in decades.

The data was not specific to any states, but the Northeast posted the worst numbers of all regions.

This information is made worse when considered with recent news that 25% of all homes are valued below the mortgage balance.

Downsizing in Detroit

From the Detroit News comes the story of the Detroit Mayor's plan to relocate residents within the city so as to consolidate the areas in which city services are needed:

Mayor Dave Bing said Wednesday he "absolutely" intends to relocate residents from desolate neighborhoods and is bracing for inevitable legal challenges when he unveils his downsizing plan.

In his strongest statements about shrinking the city since taking office, Bing told WJR-760 AM the city is using internal and external data to decide "winners and losers." The city plans to save some neighborhoods and encourage residents to move from others, he said.

"If we don't do it, you know this whole city is going to go down. I'm hopeful people will understand that," Bing said. "If we can incentivize some of those folks that are in those desolate areas, they can get a better situation."

"If they stay where they are I absolutely cannot give them all the services they require."

There are large abandoned areas of Detroit in which empty buildings sit. Detroit's population has been cut in half since 1950. I have heard discussions of this type before in which Detroit community activists recommend that large abandoned areas be returned to agricultural purposes.

I have heard of no other city where such a plan is being attempted, but Detroit may not be the last city to try to shrink itself.

There are large areas in Harrisburg occupied only by vacant lots or abandoned buildings. Such areas will grow if the city eventually adopts a recommendation to double property taxes.

If Detroit's plan works, it may be the first successful, peaceable effort to shrink a large city in history. The plan may become a model for other major cities.

One aspect that the article does not address is the title defects resulting from tax sales. If Detroit is anything like Harrisburg, there are many properties that have been sold at tax sales, thus creating a title defect on those properties. Those properties will remain unusable even after a consolidation unless arrangements are made (either through litigation or payment) with the owners that lost the properties at tax sales. The City will have to deal with not only the current occupants, but any owner whose interest was supposedly extinguished through prior tax sales. This problem might also hamper Detroit's relocation efforts, as properties to which Detroit attempts to relocate residents might also be encumbered with tax sale related title defects.

Tax sale title defects will continue to hinder municipal efforts to consolidate or otherwise revitalize blighted areas of cities.

25% of all mortgage holders under water.

Marketwatch.com reports that nearly one-fourth of all Americans with a mortgage owe more on the mortgage than the property is worth.

Most of these "under water" properties are concentrated in California, Florida, Nevada, Arizona, Michigan and Georgia.

This problem will be resolved only when these properties are foreclosed upon or the mortgages are released through short sales. Either way, lenders will face serious losses.

Any government attempt to delay or hinder foreclosures will only delay the resolution.