Copyright (c) 2014 Mark Shapiro
Is it possible to levy on a landlord's security deposit in the name of your judgment debtor? Can the landlord brush you off by claiming that they have to hold the security deposit until your judgment debtor moves out? At court, landlords very often prevail on third-party claims of security deposits.
I am a Judgment Broker, not a lawyer, and this article is only my opinion, please consult with a lawyer if you need legal advice.
Very often, even when you get your assignment order approved on whatever is left over in a security deposit after the debtor moved; sometimes when your debtor knows they won't be getting their security deposit, they just don't pay the landlord the final month of rent, so there's no deposit remaining when the judgment debtor moves out.
Even if a landlord is only keeping the judgment debtor's money, some judges think the deposit is theirs as security for the debtor's property rental agreement, and they will allow it to be turned over only after a successful completion of the rental agreement. Certain judges don't even want you to subpoena landlords for personal appearances in court think that would be too harassing. They believe you should be able to get whatever you require from a landlord just by subpoenaing records.
One might subpoena the landlord's bank statements if the debtor is paying through direct deposit, or paying rent in some other way which do not allow you to figure out where the debtor's money is coming from; without harassing them.
Usually, the amount of money held isn't worth fighting a exemption claim, unless it is an expensive property. If you challenge such a claim, be ready to pay the landlord's lawyer fees. Professional judgment enforcers try them occasionally, however if a landlord files a third-party claim on the funds, they do not oppose the claim, they just drop the matter.
Within California, the landlord's lawyer may point out the CCPs, the sections that specify what properties are exempt from creditor executions. One CCP implies that property is not assignable or transferable by the debtor, except to their landlord. The landlord's attorney might argue, while the CCP is not that specific, it does make sense that the deposit is not subject to creditor executions. At this point, you'll probably lose your opposition to the 3rd-party claim.
The deposit of the tenant is assignable to the landlord. Tenants do this often when they authorize the landlord to deduct from the deposit for repairs (often the language is in the rental agreement) and to pay all or a portion of the last month of rent. See California Code 1950.5(h). Since such security deposits are assignable, and since they are the property of the tenant, not their landlord, they're subject to execution. Whether your court allows this is more of an art than science.
One could try to argue that the security deposit the landlord is keeping is by law, property of the debtor, held by their landlord, and therefore is subject to a creditor levy as per California Civil Code sections 1950.5(a),(d),(m),(n) and (o); and Code of Civil Procedure sections 695.010(a) and 699.710. Of course, bringing up these laws is not an automatic slam-dunk.
Generally, a judge will use your "Motion for Turnover Order and Sanctions, for GGGGG, Third Party Holding Assets of XXXX, Judgment Debtor" as a chance to look at the situation as a possible exemption claim for your judgment debtor. Some judges will order the deposit to be turned over only if they believe the debtor can replace them to the landlord. Otherwise, as a public policy matter, the judge is not going to order a rental deposit be turned over if that results in the eviction of your debtor renter, especially where minor children are involved.
There is no guarantee thatyou will prevail in a challenge to a third-party claim. In summary, one can give rental deposit levies a shot, but don't push it too hard when the landlord files a claim. The more relevant California laws are below:
1950.5(a) This section applies to security for a rental agreement for residential property that is used as the dwelling of the tenant.
(d) Any security shall be held by the landlord for the tenant who is party to the lease or agreement. The claim of a tenant to the security shall be prior to the claim of any creditor of the landlord.
(h) Upon termination of the landlord's interest in the premises, whether by sale, assignment, death, appointment of receiver or otherwise, the landlord or the landlord's agent shall, within a reasonable time, do one of the following acts, either of which shall relieve the landlord of further liability with respect to the security held:
(1) Transfer the portion of the security remaining after any lawful deductions made under subdivision (e) to the landlord's successor in interest. The landlord shall thereafter notify the tenant by personal delivery or by first-class mail, postage prepaid, of the transfer, of any claims made against the security, of the amount of the security deposited, and of the names of the successors in interest, their address, and their telephone number.
(m) No lease or rental agreement may contain any provision characterizing any security as "nonrefundable."
(o) Proof of the existence of and the amount of a security deposit may be established by any credible evidence, including, but not limited to, a canceled check, a receipt, a lease indicating the requirement of a deposit as well as the amount, prior consistent statements or actions of the landlord or tenant, or a statement under penalty of perjury that satisfies the credibility requirements set forth in Section 780 of the Evidence Code.
Article Source: http://www.abcarticledirectory.com
Mark Shapiro - Judgment Broker - www.JudgmentBuy.com - where Judgments go to get Recovered!
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