Does My Landlord Need to Return a Security Deposit to a Roomate Who Moved Out?
The answer will be a matter of subjective determination for the court based on all the facts and circumstances involved. Some of the factors the court may consider, among others, include whether the co-tenant was reimbursed for 1/2 the deposit, the amount owed by the co-tenant for back rent, whether the landlord kept the deposit and sent notices according to the below statute. If the co-tenant received notice of return of deposit money and failed to claim it, it is possible a waiver or laches defense could be raised.
The court may also declare that a constructive trust exists, which is essentially a legal fiction designed to avoid injustice and prevent giving an unfair advantage to one of the parties. This may be based on the contributions made by one partner to the property of the other. The court typically requires a finding of unjust enrichment before it wil impose a constructive trust. Each case is decided on its own facts, taking all circumstances into consideration.
The doctrine of unjust enrichment is based upon the principle that one should not be permitted unjustly to enrich himself at the expense of another but should be required to make restitution of or for property received, retained or appropriated. The general rule is that a payment of money under a mistake of fact may be recovered provided that such payment will not prejudice the payee. It is considered unjust enrichment to permit a recipient to retain money paid because of a mistake, unless the circumstances are such that it would be inequitable to require its return. This applies even if the mistake is one on one side (unilateral) and a consequence of the payors negligence, or that the payee acted in good faith. "A person who has conferred a benefit on another by mistake is not precluded from maintaining an action for restitution by the fact that the mistake was due to his lack of care." (Restatement of Restitution § 59.) Equity, which is based on notions of fairness, often allows a person who pays money to another under the mistaken belief a valid contract exists to recover that money when the contract is subsequently canceled for fraud or mistake and the rights of innocent parties have not intervened. (Restatement of Restitution §§ 17, 28.)
A constructive trust is one that arises by operation of law against one who, by fraud, wrongdoing, or any other unconscionable conduct, either has obtained or holds legal right to property which he ought not to, in good conscience, keep and enjoy. A constructive trust is an appropriate remedy against unjust enrichment. Unjust enrichment is present in nearly every case where a constructive trust is imposed. However, the court's creation of a constructive trust is not necessarily dependent on a finding that the person whose property is subjected to it has acted wrongly, but may rest as well upon a finding of unjust enrichment arising from other circumstances that "render it inequitable for the party holding the title to retain it." (Starleper v. Hamilton 106 Md.App. 632, 666 A.2d 867 (1995).)
The basis for creating a constructive trust is to prevent unjust enrichment. (Restatement of Restitution § 160, comment c.) "Where a person wrongfully disposes of property of another knowing that the disposition is wrongful and acquires in exchange other property, the other is entitled to enforce a constructive trust of the property so acquired." If the property so acquired is or becomes more valuable than the property used in acquiring it, the profit thus made by the wrongdoer cannot be retained by him; the person whose property was used in making the profit is entitled to it." (Restatement Restitution § 202.) When property is given or devised to a defendant in breach of a donor's or testator's contract with a plaintiff, equity will impose a constructive trust upon that property being held by another even though (1) the transfer is not the result of breach of a fiduciary duty or an actual or constructive fraud practiced upon the plaintiff, and (2) the donee or devisee had no knowledge of the wrongdoing or breach of contract. (Jones v. Harrison , 250 Va. 64, 458 S.E.2d 766 (1995 ).)
A person who has been unjustly enriched at the expense of another may be required to make restitution to the other. Despite not having a contractual agreement, a trial court may require an individual to make restitution for unjust enrichment if he has received a benefit which would be unconscionable to retain. A person may be deemed to be unjustly enriched if he (or she) has received a benefit, and keeping it would create injustice.
If you wish to use the legal system to resolve your dispute, you may want to review the following general information regarding contract law and breach of contract actions:
Contracts are agreements that are legally enforceable. A contract is an agreement between two parties that creates an obligation to do or refrain from doing a particular thing. The purpose of a contract is to establish the terms of the agreement by which the parties have fixed their rights and duties. An oral contract is an agreement made with spoken words and either no writing or only partially written. An oral contract may generally be enforced the same as a written agreement. However, it is much more difficult with an oral contract to prove its existence or the terms. Oral contracts also usually have a shorter time period within which a person seeking to enforce their contract right must sue. A written contract generally provides a longer time to sue than for breach of an oral contract. Contracts are mainly governed by state statutory and common (judge-made) law and private law. Private law generally refers to the terms of the agreement between the parties, as parties have freedom to override many state law requirements regarding formalities of contracts. Each state has developed its own common law of contracts, which consists of a body of jurisprudence developed over time by trial and appellate courts on a case-by-case basis.
An unjustifiable failure to perform all or some part of a contractual duty is a breach of contract. A legal action for breach of contract arises when at least one party's performance does not live up to the terms of the contract and causes the other party to suffer economic damage or other types of measurable injury. A lawsuit for breach of contract is a civil action and the remedies awarded are designed to place the injured party in the position they would be in if not for the breach. Remedies for contractual breaches are not designed to punish the breaching party. The five basic remedies for breach of contract include the following: money damages, restitution, rescission, reformation, and specific performance. A money damage award includes a sum of money that is given as compensation for financial losses caused by a breach of contract. Parties injured by a breach are entitled to the benefit of the bargain they entered, or the net gain that would have accrued but for the breach. The type of breach governs the extent of damages that may be recovered.
Restitution is a remedy designed to restore the injured party to the position occupied prior to the formation of the contract. Parties seeking restitution may not request to be compensated for lost profits or other earnings caused by a breach. Instead, restitution aims at returning to the plaintiff any money or property given to the defendant under the contract. Plaintiffs typically seek restitution when contracts they have entered are voided by courts due to a defendant's incompetence or incapacity.
Rescission is the name for the remedy that terminates the contractual duties of both parties, while reformation is the name for the remedy that allows courts to change the substance of a contract to correct inequities that were suffered. In order to have a rescission, both parties to the contract must be placed in the position they occupied before the contract was made. Courts have held that a party may rescind a contract for fraud, incapacity, duress, undue influence, material breach in performance of a promise, or mistake, among other grounds.
Specific performance is an equitable remedy that compels one party to perform, as nearly as practicable, his or her duties specified by the contract. Specific performance is available only when money damages are inadequate to compensate the plaintiff for the breach.
Promissory estoppel is a term used in contract law that applies where, although there may not otherwise be an enforceable contract, because one party has relied on the promise of the other, it would be unfair not to enforce the agreement. Promissory estoppel arises from a promise which the promisor should reasonably expect to induce action or forebearance of a definite and substantial character on the part of the promisee and which does induce such action or forebearance in binding if injustice can be avoided only by enforcement of the promise. Detrimental reliance is a term commonly used to force another to perform their obligations under a contract, using the theory of promissory estoppel. Promissory estoppel may apply when a promise was made; reliance on the promise was reasonable or foreseeable; there was actual and reasonable reliance on the promise; the reliance was detrimental; and injustice can only be prevented by enforcing the promise. Detrimental reliance must be shown to involve reliance that is reasonable, which is a determination made on an individual case-by-case basis, taking all factors into consideration. Detrimental means that some type of harm is suffered.
Reasonable reliance is usually referred to as a theory of recovery in contract law. It was what a prudent person might believe and act upon based on something told by another. Sometimes a person acts in reliance on the promise of a profit or other benefit, only to learn that the statements or promises were either incorrect or were exaggerated. The one who acted to their detriment in reasonable reliance may recover damages for the costs of his/her actions or demand performance. Reasonable reliance connotes the use of the standard of an ordinary and average person.
Please see the following TN statute to determine applicability:
66-28-301. Security deposits.
(a) All landlords of residential property requiring
security deposits prior to occupancy are required to
deposit all tenants' security deposits in an account used
only for that purpose, in any bank or other lending
institution subject to regulation by the state of Tennessee
or any agency of the United States government. Prospective
tenants shall be informed of the location of the separate
(b) Within ten (10) business days of the termination of
occupancy, but prior to any repairs or cleanup of the
(1) The landlord shall inspect the premises and compile a
comprehensive listing of any damage to the unit that is the
basis for any charge against the security deposit and the
estimated dollar cost of repairing the damage. The tenant
shall then have the right to inspect the premises to
ascertain the accuracy of the listing. The landlord and the
tenant shall sign the listing, which signatures shall be
conclusive evidence of the accuracy of the listing. If the
tenant refuses to sign the listing, the tenant shall state
specifically in writing the items on the list to which the
tenant dissents, and shall sign the statement of dissent;
(2) If the tenant has moved or is otherwise inaccessible to
the landlord, and, if at least ten (10) days before the
lease termination date, the landlord has given the tenant
written notice of the tenant's right to schedule a mutual
inspection of the subject premises with the landlord during
normal business hours and the tenant has not contacted the
landlord prior to vacating the premises or the tenant has
waived in writing the right of inspection, the landlord
shall then inspect the premises and compile a comprehensive
listing of any damage to the unit that is the basis for any
charge against the security deposit and the estimated
dollar cost of repairing the damage. The landlord shall
then mail a copy of the listing of damages and estimated
cost of repairs to the tenant at the tenant's last known
mailing address. After mailing the copy of the listing of
damages and estimated cost of repairs to the tenant, the
landlord may begin to prepare the unit for occupancy.
(c) No landlord shall be entitled to retain any portion of
a security deposit if the security deposit was not
deposited in a separate account as required by
subsection (a) and if the final damage listing required by
subsection (b) is not provided.
(d) A tenant who disputes the accuracy of the final damage
listing given pursuant to subsection (b) may bring an
action in a circuit or general sessions court of competent
jurisdiction of this state. The tenant's claim shall be
limited to those items from which the tenant specifically
dissented in accordance with the listing or specifically
dissented in accordance with subsection (b); otherwise the
tenant shall not be entitled to recover any damages under
(e) Should a tenant vacate the premises with unpaid rent or
other amounts due and owing, the landlord may remove the
deposit from the account and apply the moneys to the unpaid
(f) In the event the tenant leaves not owing rent and
having any refund due, the landlord shall send notification
to the last known or reasonable determinable address, of
the amount of any refund due the tenant. In the event the
landlord shall not have received a response from the tenant
within sixty (60) days from the sending of such
notification, the landlord may remove the deposit from the
account and retain it free from any claim of the tenant or
any person claiming in the tenant's behalf.
(g) This section does not preclude the landlord or tenant
from recovering other damages to which such landlord or
tenant may be entitled under this chapter.
(h)(1) Notwithstanding the provisions of subsection (a),
all landlords of residential property shall be required to
notify their tenants at the time such persons sign the
lease and submit the security deposit, of the location of
the separate account required to be maintained pursuant to
this section, but shall not be required to provide the
account number to such persons, nor shall they be required
to provide such information to a person who is a