Ask a Lawyer

By: Steven M. Williams

I am evicting a resident for nonpayment of rent, and I have a monetary judgment against him for about $5,000. The resident told me that he intends to remove his home from my community and relocate it elsewhere. I would prefer that he not remove it because I would be able to rent it pretty quickly. It is in good shape, and I have a waiting list of prospective residents. Can I refuse to allow him to take it since he owes me money?

In general, community owners are not allowed to prohibit the removal of a home by a resident. Owners can enact reasonable rules regarding the removal (for example, ensuring a removal permit is issued and requiring that the removal contractor be insured), but a blanket prohibition is not allowed. The fact that this resident owes you money and that you have a judgment does not change this. The judgment is merely an indication that the resident owes you money. It does not give you any rights to the home. However, if you were to have a writ of execution issued by your local court and a “levy” on the home were to occur, you could prohibit the removal. This is because the levy would constitute a lien on the home and prohibit its removal from the property, forcing the resident to pay you if he wants to take the home with him. If he does not, you could sell the home at an execution sale. Be careful, though: the buyer of the home will take the title subject to any other liens on the home and any real estate taxes that are owed on it.

About six months ago, a resident moved her new home into my community. As part of the installation, I charged a fee for my supervision of the installation. The fee I charged was a standard flat fee that I always charge. Now, I am evicting the tenant due to nonpayment of rent, and I want the home to be removed. The resident claims that I have to refund the installation fees I charged her. Is she correct?

No, your resident is not correct. The Manufactured Home Community Rights Act (MHCRA) requires that installation fees be refunded to a resident if the community owner evicts the resident within one year of the installation for reasons other than nonpayment of rent or breach of a condition of the lease. Because you are evicting the resident due to nonpayment, you are not required to refund the installation fees. However, you may have liability to the resident if the fee you charged is more than the actual costs you incurred in supervising the installation. The MHCRA expressly
limits installation fees to the owner’s actual cost in providing the supervision.

I recently attended a seminar regarding landlord and tenant law. One of the speakers discussed Pennsylvania’s security deposit law, but it was very confusing. Can you provide a summary of the law regarding security deposits held by landlords in Pennsylvania?

The Pennsylvania Landlord and Tenant Act (LT Act) sets out the requirements for residential landlords who collect security deposits from their tenants. Importantly, these requirements cannot be waived in the lease. Here are the basic requirements:

The Amount of the Security Deposit:

• Landlords cannot require a sum of more than two months’ rent as a security deposit during the first year of the lease term.
• During the second and subsequent years of the lease term, the amount held by a landlord as a security deposit may not exceed one month’s rent.
• If a landlord increases the rent each year, the landlord may also require a tenant to pay more money towards the security deposit to match the amount of the increased rent. This can be done for years two through four of the lease term. A landlord may not demand such increases after the fourth year.

All monies that a landlord holds to secure payment of future obligations, such as a pet deposit or the last month’s rent, are included in the total amount the landlord is entitled to hold as a security deposit. For example, if a landlord requires a tenant to pay a pet deposit or the last month’s rent in addition to a security deposit, the total amount for these items cannot exceed two months’ rent in year one or one month’s rent thereafter.

The Use of the Security Deposit:

• A landlord can apply the security deposit to unpaid rent, damages to the property, and amounts due as a result of the breach of any other condition in the lease by the tenant.
• Within 30 days after the termination of a lease, or upon the surrender and acceptance of leased premises, whichever is first (the “30-day period”), a landlord must provide the tenant with a detailed written list of all damages to the premises for which the landlord claims the tenant is liable and all other amounts owed by the tenant to the landlord. At the same time, the landlord must pay the tenant the difference, if any, between the security deposit, together with any unpaid interest due to the tenant, and the amounts owed to the landlord for unpaid rent, damages to the property, and amounts due as a result of the breach of any other condition in the lease by the tenant (all of which must be included on the list). Note, the LT Act does not define what is meant by the payment must be “made”to the tenant. Thus, I recommended that landlords send this list and the payment, if any is due, early enough to ensure receipt by the tenant within the 30-day period.
• If the landlord fails to provide this list and the amounts owed to the tenant within the 30-day period, the landlord
  • Will lose the right to withhold any portion of the security deposit;
  • Will lose the right to sue the tenant for damages to the leased premises; and
  • Can owe the tenant up to two times the amount by which the security deposit and any unpaid interest owed on it exceeds the actual damages to the premises.

If the tenant does not give the landlord a forwarding address at the time of the lease termination or upon the surrender and acceptance of the premises, the 30-day period will not apply. A landlord will still be required to account for the security deposit and return any amount owed to the tenant but can do so later than the 30-day period.

Interest on the Security Deposit:

• If a security deposit is more than $100, a landlord must deposit and hold the security deposit in an escrow account that is separate from the landlord’s operational accounts. The escrow account can be interest or noninterest-bearing.
• The landlord must provide the tenant with the name and address of the banking institution holding the security deposit.
• After the second year of the lease term, the landlord must pay the tenant interest on the security deposit every year. Payment is due on the anniversary date of the lease term. The LT Act does not state the amount of interest that a landlord must pay to a tenant, but conventional wisdom is that the interest rate should be no less than what a savings account would pay. If the security deposit is held in an interest-bearing escrow account, then the rate of interest owed to the tenant is the rate paid on the account.

From the interest payable to the tenant each year, the landlord is entitled to retain one percent (1%) of the deposit as an administrative expense. If the administrative expense in any year is more than the interest owed to the tenant for that year, then no payment is made to the tenant. However, I would suggest that the landlord give the tenant a detailed accounting showing the amount of interest earned on the account and the amount of the administrative fee. This would avoid problems if the tenant claims that the landlord did not pay interest as required by the law.

As you can see, the law regarding security deposits is complicated. It is imperative that landlords understand and comply with the provisions to avoid liability. In addition, the Attorney General’s Office frequently investigates security deposit law violations, and landlords will be well-served to ensure complete compliance with the laws.