Landlord/Tenant/Property Management - Security Deposits

Three tenants vacated a rental property, and all three received an equal third portion of the security deposit. One former tenant is upset, claiming that only her boyfriend paid the entire deposit, so she should receive the entire refund.

Because leases are joint and severable, the agent believes the former tenant’s frustration is unfounded, but wanted to clarify. In the future, perhaps it`s just best to send one refund check with all tenants’ names on it. The agent has encountered such an issue before where all three tenants needed to be present in order for the bank teller to cash the check, and sometimes that`s not logical.

The agent was trying to be nice by cutting three checks; one for each (former) tenant — all in the same amount. Is the agent in compliance with the statutes or administrative rules?

Previously, Wis. Admin. Code § ATCP 134.06(2)(d) stated that “If a landlord returns a security deposit in the form of a check, draft or money order, the landlord shall make the check, draft or money order payable to all tenants who are parties to the rental agreement, unless the tenants designate a payee in writing.” Making the check out to all tenants was required unless the tenants provided other disbursement directions in writing.

Given the rule has been repealed, there is not a specific statutory or Administrative Code rule addressing the return of the deposit. Prudent practice would be to have a written authorization from tenants as to the return of the deposit or maintain the former practice of making the check payable to all the tenants. Unless the broker has received written instructions from all tenants regarding how and to whom the landlord should return the security deposit, the landlord need only issue one check for the total remaining balance of the security deposit that is payable all tenants. The tenants are then responsible for gathering the necessary signatures to endorse the check and deciding how the money should be divided. This protects the landlord from getting caught in the middle of tenant disputes and provides an easy mechanism for promptly disbursing the security deposit.

The tenants would be well advised to have a roommate agreement among themselves that can decide who is responsible for what payments and who receives the security deposit under various situations.
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