Who Has Custody of Your Money?

Let me start by saying, welcome! As all my regular readers know, I am very passionate about the following two things: Managing Tenant Expectations and Treating Your Rental as a Business — For Profit Landlord.

If you are new here, I highly recommend you begin by checking out the posts above. If you like those, don’t stop there! Check out the rest of the valuable resources and articles.

The thing I have learned in real estate is that custody is so important — even if you are the one in the right.

As an always learning landlord, I love to participate in as many investor forums and Facebook groups as possible. I get the opportunity to give back and help others — something I am very passionate about. But I also get to learn from others by evaluating their situations and issues — the causes, their reactions, and the effect all the variables had on the situation.

Possession is Nine-Tenths of the Law: Who Has Custody of Your Money?

A while ago I was talking to a tenant about her security deposit. She had moved halfway across the country and was pissed the landlord hadn’t returned the security deposit. I asked the tenant if she had followed up with the landlord. She abruptly responded back, “No, its not my job to remind them. They know they are responsible to return it, and I need it NOW!”

Every state is different and some have VERY specific and strict laws. In certain states, if the landlord handles the security deposit incorrectly, the landlord is required to pay the tenant TRIPLE the security deposit. So obviously if your rental was located in one of these states, your landlord would be quaking in his or her boots.

In this situation, though, her state had quite the opposite — it had very liberal laws. With a non-responsive landlord, it could take months to get the money returned.

During our conversation, I introduced my third pillar of passion: Possession is nine-tenths of the law. This expression means that ownership is easier to maintain if one has possession or custody of something, or difficult to enforce if one does not.

It doesn’t matter if you are right or wrong, if you aren’t in possession and have to go to court or further to get possession, you probably won’t win! 

Let’s take a step back and clarify. I am not saying that you shouldn’t go to court! I am simply saying that before you get all steamed up and say, “my way or the highway” really evaluate what that means.

As I have said before in Tenant Relations: Honey vs. Vinegar, being nice usually wins every time.

So in this case, the tenant needed the money back NOW! Well, the only way was to force the landlord through court action, which we all know is not cheap or quick. So instead I recommended that she sweetly follow up.

Guess what? The sweetness got her check back in three days. Had she been forceful, rude, or mean the landlord could have easily held on to her money and made her get her deposit back by going the court route. Instead, honey works.

The point of this article is that being right isn’t worth anything if it ruins your goal. So use honey, judgement, and a bit of patience when evaluating how to handle a situation. If you have custody — great! If not, then make sure you follow your brain and not your heart.

Trust me, as red head — this is a lesson I am still learning :)