sb452 intr

Senate Bill No. 452
(By Senator Burnette)
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[Introduced March 9, 2001; referred to the Committee on the Judiciary.]
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A BILL to amend chapter thirty-seven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article six-a, relating to residential rental security deposits; providing definitions; requiring landlord to deposit and maintain security funds in escrow account; requiring landlord to supply tenant with property inspection sheet; requiring interest on security deposits, how calculated and deductions that may be made therefrom; setting out reasons for withdrawal or transfer of these funds by landlord; providing how security deposit funds handled at end of tenancy; providing remedies for landlord's failure to return security deposit or to otherwise comply with article relative to disposition of the security deposit; authorizing attorney fees; providing remedy for tenant when there is no escrow account; addresses for notices; providing that procedures of article are in addition to any other remedies; and prohibiting waiver of any provisions of article.

Be it enacted by the Legislature of West Virginia:

That chapter thirty-seven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article six-a, to read as follows:
ARTICLE 6A. RESIDENTIAL RENTAL PROPERTY SECURITY DEPOSITS.
§37-6A-1. Applicability.

(a) This article applies to tenancies of residential rental property intended to be used by the tenant as a dwelling, whether the tenancy is established by a written lease or other written rental agreement.

(b) This article only applies to security deposits demanded or received after the effective date of this article.
§37-6A-2. "Security deposits" defined.

For the purposes of this article, "security deposit" means any payment of funds made by or for a tenant that is to be used to pay for damages to the premises or to secure performance of any other obligation of the tenant, but which is refundable to the tenant if not used for those purposes at the termination or expiration of the tenancy or any other time. "Security deposit" does not include any prepayment rent or other periodic payments due for the last rental period or other rental periods: Provided, That if the tenant actually pays rent for any period for which prepaid rent has already been paid, then prepaid rent is "security deposit" for the provisions of this article relating to the return of the security deposit, but that prepaid rent is not "security deposit" subject to the provisions of this article relating to escrow or interest payment requirements.

§37-6A-3. Landlord to deposit and maintain security deposit funds in escrow account.

(a) Security deposit funds, and interest on those funds to which the tenant is entitled, that are held by the landlord continue to be the funds of the tenant. Those funds shall be placed in an escrow account in trust for the tenant in an account with a federally insured financial institution located in the state of West Virginia.

(b) The security deposit funds shall be deposited in a separate account and not commingled with the business or personal funds of the landlord until landlord has complied with the provisions of this article.

(d) The security deposit funds of two or more landlords held by an agent for those landlords may be held in one escrow account in the name of the agent only if the agent gives the tenant a written agreement to pay the tenant for the amount of any funds to which the tenant is entitled pursuant to this article if the landlord fails to pay the funds out of the escrow or the landlord's personal funds.

(e) The account with a federally insured financial institution may be an interest bearing or a noninterest bearing account. Whether the account bears interest does not affect the duty of the landlord to pay interest to the tenant as provided in this article.
§37-6A-4. Property inspection sheet; effect.

(a) For each unit the landlord shall supply to a tenant a property inspection sheet. The property inspection sheet shall be furnished to a tenant by the end of the seventh day that the tenant is entitled to occupy the unit. It shall describe any damages or deficiencies in the premises that have been reported to the landlord, that are otherwise known to the landlord or that would have been revealed by a reasonable inspection of the premises.

(b) If the landlord fails to provide a property inspection sheet as provided in subsection (a) of this section, then the landlord is not entitled to any sums on account of damages to the premises unless:

(1) The landlord establishes by testimony and corroborating evidence that the premises were not damaged prior to the tenant assuming occupancy; or

(2) The landlord establishes by testimony and corroborating evidence that the tenant did not comply with any other obligation that may lawfully entitle the landlord to the security deposit funds.

(c) For the purposes of this section, "corroborating evidence" means physical evidence, including photographs or videotapes.

(d) A tenant who has received a property inspection sheet from the landlord may return it to the landlord on or before the due date of the next rent payment.

(e) If the tenant fails to return a property inspection sheet as provided in subsection (d) of this section, and if the landlord alleges that the tenant caused damage to the premises, then the tenant can establish that the damages to the premises occurred before the tenant assumed occupancy only by testimony and corroborating evidence.

(f) In order to qualify as a property inspection sheet for the purposes of this article the sheet must:

(1) Provide for a carbon or pressure copy of the property inspection sheet when completed and state that the tenant may keep the carbon or pressure copy for the tenant, or it must advise the tenant that the tenant should make a photocopy or other image copy of the completed sheet before returning it to the landlord;

(2) Identify a place for the landlord to list and describe any damages or deficiencies in the premises which exist at the beginning of the tenancy that have been reported to the landlord, that are otherwise known to the landlord, or that would have been revealed by a reasonable inspection of the premises, which damages or deficiencies must be listed and described before giving the property inspection sheet to the tenant as required by subsection (a) of this section;

(3) Identify a place on the sheet for the tenant to list and describe all damages and deficiencies of the unit;

(4) State in plain language the requirements of the provisions of subsections (a), (b), (c) and (d) of this section;

(5) Identify the financial institution where the tenant's security deposit will first be deposited; and

(6) Identify a place for the tenant to supply an address for return of the security deposit or the receipt of other notices after the tenancy has ended.

§37-6A-5. Interest on security deposits; calculation and deductions.

(a) At the same time any of the security deposit is returned or required to be returned to the tenant, the landlord shall also give to the tenant interest on the security deposit funds calculated as set out in this section.

(b) Gross interest on security deposit funds for each tenant shall be calculated as set out in subsection (c) of this section. The landlord may deduct from the amount determined in subsection (c) of this section the amounts allowed in subsection (d) of this section to determine the final amount of interest due under this section.

(c) At the discretion of the landlord, gross interest may be determined using either simple interest of three percent per year or using the compound or other rate of return of a savings account in which the landlord deposits the funds so long as that is a savings account rate that is not lower than a rate available to a member of the public who deposits funds in that type of account but who does no other business with the financial institution. Gross interest shall be calculated beginning with the first day or month after the entire security deposit agreed to by the parties has been received by the landlord and ending with the end of the last month before the funds are withdrawn or transferred out of the account. Interest is not to be paid on amounts deducted from the security deposit during the tenancy as provided in section seven of this article. Any total amount less then one dollar is not included in gross interest.

(d) The landlord may deduct from the gross interest calculated according to subsection (c) of this section:

(1) The amount of a fee that the bank charged the landlord for the account;

(A) If the security deposit is placed in a savings account;

(B) If the bank regularly charges its customers for that type of account a fee if the amount in the account is below a stated dollar figure and the account is below that stated amount; and

(C) If in fact the amount deposited in the account resulted in a fee charged against the account while the tenant's security deposit funds were placed in that account.

(2) If the security deposit was placed in a savings account as allowed by this article, any fee charged by the bank to write a check to the tenant out of the account or to transfer money from that account to an account from which the landlord can make payment to the tenant.

§37-6A-6. Reasons for withdrawal or transfer of funds by landlord from security deposit; amounts.

(a) The landlord may withdraw or transfer funds only for the following reasons:

(1) To replace periodic rent or other agreed amounts that are due and have not been paid by the tenant;

(2) To repair damages to the premises or the landlord's personal property beyond ordinary wear and tear, if these damages were caused by a tenant or guests of a tenant;

(3) To pay expenses of cleaning the premises that resulted because the tenant did not comply with the tenant's duty to provide routine and ordinary cleaning;

(4) To reimburse the landlord for lost rent for any period during which a tenant has refused to lawfully surrender occupancy;

(5) To pay filing fees and other fees charged or assessed by a magistrate court in a proceeding to end the tenancy or remove the tenant from the premises;

(6) To pay the actual charge or if none, the reasonable expense of moving and storing personal property that the owner is entitled to move and store by other law; and

(7) To pay other expenses incurred by the landlord arising out of a tenant's failure to perform the tenant's obligations.

(b) The landlord may withdraw or transfer funds from the security deposit account to the landlord's account or use only in the actual amount of or if there is no actual amount identifiable, in an amount for the reasonable value of the expense charge or fee.

§37-6A-7. Withdrawal or transfer of security deposit by landlord during tenancy.

(a) If before the tenancy is ended the landlord has a lawful reason to withdraw or transfer all or part of a tenant's security deposit, but the landlord cannot or does not elect to terminate the tenancy with the tenant then the landlord may withdraw or transfer funds out of the security deposit escrow account after delivering to the tenant a written notice stating that funds will be withdrawn or transferred and itemizing the amounts being withdrawn or transferred.

(b) The landlord may demand in writing that the tenant reimburse the security deposit for the amount withdrawn or transferred and if the amount is not paid by the tenant to the landlord by the end of the next rental period after the rental period in which written demand was delivered then the landlord may bring an action for unlawful detainer by the tenant.
§37-6A-8. Disposition of security deposit at end of tenancy; no reasons for withdrawal or transfer of funds.

(a) If there are no reasons for the landlord to withdraw or transfer any of the tenants security deposit from the escrow account, the landlord shall send the security deposit and any interest owed pursuant to this article to the tenant by the end of the fifteenth day after the end of the tenant's right to occupation of the premises or by the end of the fifteenth day after the surrender of occupation of the premises to the landlord, whichever is later unless the landlord is allowed additional time under subsection (b) or (c) of this section.

(b) If the landlord rents units to students or other tenants who terminate their occupancies on a seasonal basis if more than two thirds of the landlord's units are terminated within a period of thirty days, then the landlord has thirty days to send the notice.

(c) If the tenant is responsible for paying the rates, fees or charges for any utility the supplier of which is authorized by law to place a lien on the rental property for delinquent rates, fees or charges then a landlord shall return the security deposit by the end of the fifteenth day after receipt from the utility or the tenant of documentation that all utility rates, fees and charges for which the tenant is responsible have been paid if that day is later than the day allowed by subsection (a) or (b) of this section.

§37-6A-9. Disposition of security deposit at end of tenancy; reasons for withdrawal or transfer do exist.

(a) Notice of intent to withdraw or transfer funds. -- If a landlord has reasons to withdraw or transfer security deposit funds of the tenant as permitted by this article the landlord shall send the tenant a notice of the reasons the landlord intends to withdraw or transfer funds from the security deposit by:

(1) The end of the fifteenth day after the end of the tenant's right to occupation of the premises or by the end of the fifteenth day after the surrender of occupation of the premises to the landlord whichever is later, unless the landlord is allowed additional time under subdivision (2) or (3) of this subsection;

(2) If the landlord rents to students or other tenants who terminate their occupancies on a seasonal basis and if more than two thirds of the landlord's units are terminated within thirty days of the termination of the tenancy in question then the landlord shall send the notice by the end of the thirtieth day; and

(3) If the tenant is responsible for paying the rates, fees or charges for any utility the supplier of which is authorized by law to place a lien on the rental property for delinquent rates, fees or charges then the landlord shall return the security deposit by the end of the fifteenth day after receipt from the utility or the tenant of documentation that all utility rates, fees and charges for which the tenant is responsible have been paid if that day is later than the day allowed by subdivisions (1) and (2) of this subsection.

(b) Itemized statement and return of remaining funds. -- If a landlord has reasons to withdraw or transfer security deposit funds of the tenant as permitted by this article the landlord shall send the tenant a statement itemizing the amounts of funds withdrawn or transferred from the account and if any the remaining security deposit funds and interest to which the tenant is entitled by:

(1) The end of the thirtieth day after the end of the tenant's right to occupation of the premises or by the end of the thirtieth day after the surrender of occupation of the premises to the landlord, whichever is later unless the landlord is allowed additional time under subdivision (1) or (3) of this subsection;

(2) If the landlord rents units to students or other tenants who terminate their occupancies on a seasonal basis and if more than two thirds of the landlord's units are terminated within thirty days of the termination of the tenancy in question then the landlord shall send the notice by the end of the forty-fifth day;

(3) If the tenant is responsible for paying the rates, fees or charges for any utility the supplier of which is authorized by law to place a lien on the rental property for delinquent rates, fees or charges, then a landlord shall return the security deposit by the end of the fifteenth day after receipt from the utility or the tenant of documentation that all utility rates, fees and charges for which the tenant is responsible have been paid, if that day is later than the day allowed by subdivisions (1) and (2) of this subsection.

§37-6A-10. Tenant's remedy for landlord's failure to return security deposit.

(a) If a landlord is required by this article to return security deposit funds or interest and fails to do so by the day required then the tenant is entitled to the amount that would otherwise be due to the tenant together with an additional statutory punitive damages equal to twice that amount plus reasonable attorneys' fees as provided in sections twelve and thirteen of this article.

(b) A tenant may not recover the additional statutory punitive damages in a court action unless the tenant sends the landlord a written notice of the tenant's intent to sue five days before the date the suit is filed.

(c) A tenant may not recover additional statutory punitive damages under both this section and section thirteen of this article.

§37-6A-11. Tenant's remedy for landlord's failure to provide notice of intent to withdraw or transfer funds or to provide statement of funds withdrawn or transferred.

(a) If a landlord is required by this article to provide a notice of intent to withdraw or transfer funds or is required to provide a statement itemizing the amounts of funds withdrawn or transferred from the security deposit funds of the tenant and if the landlord fails to do so by the day required then the landlord is not entitled to withdraw or transfer any of the security deposit funds from the tenant account. The landlord shall immediately send the full amount of the security deposit and interest to the tenant and the landlord is not entitled to any other sums to pay for damages to the premises or to pay for any other obligation of the tenant.

(c) A tenant may not recover additional statutory punitive damages under this section and section twelve of this article.
§37-6A-12. Attorneys' fees.

(a) If a landlord brings an action under this article in magistrate or circuit court or removes or appeals an action from magistrate court to circuit court and if the tenant prevails in the action, then the landlord is liable for the tenant's reasonable attorneys' fees from the institution of the action in magistrate or circuit court or from the filing for removal or appeal of the action to circuit court.

(b) If a tenant brings an action under this article in magistrate or circuit court or removes or appeals an action from magistrate court to circuit court and if the tenant prevails in the action then the landlord is liable for the tenant's reasonable attorneys' fees from the institution of the action in magistrate or circuit court or from the filing for removal or appeal of the action to circuit court.

§37-6A-13. Tenant's remedies if security deposit not held in escrow account.

(a) If it is established that the landlord is not keeping or does not keep a tenant's security deposit in an escrow account as required by this article the tenant is entitled a return of the security deposit even if reasons existed under section six of this article for the landlord to withdraw or transfer funds. The tenant is also entitled to an additional statutory punitive damages of twice the amount of the security deposit.

(b) If a landlord did not keep and maintain a security deposit in an escrow account as required by this article and fails to pay to the tenant any security deposit when due, the tenant is entitled to the funds owed, additional statutory punitive damages of twice that amount and the tenant's reasonable attorneys' fees in any action for a judgment for any security deposit or interest as provided in section five of this article.

§37-6A-14. Address for sending security deposit funds or notices to tenant; property inspection sheet may provide forwarding address.

(a) Any notice or amount of funds required to be sent to a tenant pursuant to this article may be given to the tenant in person or if the premises are still a tenant's usual residence by leaving it at the premises in a secure place where the tenant can be expected to find it.

(b) If the landlord does not send the notice or funds pursuant to subsection (a) of this section the tenant shall send the notice to:

(1) An address given to a landlord for that purpose;

(2) A forwarding address given to the landlord for general purposes or to another address actually known to the landlord for the tenant;

(3) The address set forth by the tenant on the property inspection sheet, unless the landlord knows that is no longer an address for the tenant or a member of the tenant's family or a close personal friend of the tenant;

(4) The address of the premises or another address known to the landlord for which there is a reasonable possibility that the tenant has given to the postmaster a forwarding order to an address at which the tenant will receive the deposit.

(c) If there is no other address available as set out in subsection (a) or (b) of this section for which there is a real possibility to be a forwarding order, the landlord may keep the notice or funds until seven days after being given an address for the tenant by the tenant or an agent of the tenant and the landlord is not liable to the tenant for any amount in addition to the actual security deposit due to the tenant that is provided by any other provision of this article.

§37-6A-15. No limitation on other law; no double recovery of punitive damages.

(a) The provisions of this article do not limit the rights, remedies or obligations of any party under other law.

(b) The statutory punitive damages provided by this article may not be recovered in addition to punitive damages recovered under other law.
§37-6A-16. Waiver of provisions prohibited.

The requirements of this article may not be waived by the parties except as specially provided herein.

NOTE: The purpose of this bill is to protect tenants' rights to the return of their security deposits. The bill:

(1) Requires landlords to keep the tenant's security deposit money in an insured financial institution in an escrow account that is separate from the landlord's own operating funds;

(2) Requires that the interest (minus any bank fees) on the tenant's security deposit money be paid to the tenant and not kept by the landlord. It sets out a simple method for calculating interest;

(3) Allows the landlord or agent to keep all their tenants' security deposits in one account, with certain protections;

(4) Requires the landlord to give the tenant a property inspection sheet and provides that if the landlord does not do that the landlord has to provide pictures or physical evidence of any damages claimed later;

(5) Authorizes the tenant to fill out the inspection sheet and return it and provides that if the tenant does not then the tenant has to provide pictures or physical evidence that the damages occurred after the tenant moved in;

(6) Sets out the reasons that a landlord may withdraw or transfer funds from the tenant's security deposit account during or at the end of the tenancy;

(7) Provides that if the rent is paid and there are no damages: It requires the landlord to return the security deposit 15 days after the tenant moves out (or 30 days for student or other seasonal housing or up to an extra 15 days if the tenant is responsible for utilities that can place liens on the property);

(8) Provides that if there are damages: It requires the landlord to notify the tenant of the claimed damages within 15 days (or 30 for student or seasonal housing or up to 15 more if the tenant pays utilities that can place liens); and requires an itemized list of the charges to the security deposit and the return of the remaining security deposit within 30 days (or 45 days for student or other seasonal housing or up to an extra 15 days if the tenant is responsible for utilities that can place liens on the property);

(9) Provides that if the landlord fails to use a separate account to return the deposit when the landlord is supposed to or to give the required notices regarding charges to the security deposit the bill entitles the tenant to statutory punitive damages from the landlord in the amount of twice the actual damages;

(10) Provides that if the landlord fails to use a separate account to return the deposit when the landlord is supposed to or give the required notices regarding charges to the security deposit entitles the tenant to attorneys' fees for a lawyer in circuit or magistrate court;

(11) Sets out the addresses the landlord may use to avoid liability when returning the security deposit or sending notices;

(12) Provides that the parties' remedies in the statute do not limit their rights under other law, but prevents double recovery of statutory and other punitive damages; and

(13) Prohibits any lease etc. from waiving the parties' rights under the statute.

This article is new; therefore, strike-throughs and underscoring have been omitted.