Nonrefundable pet deposits under fire

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Q: Our landlord charged us a $200 nonrefundable pet deposit, plus a refundable deposit, when we moved in two years ago with our dog. Now that we’re moving out, he’s deducting for damage (scratched floors) that he claims was done by us humans, but in fact it was the dog’s nails that caused the scratches. Isn’t the pet deposit supposed to cover that? –Jim and Susan C.

A: Your question illustrates the mischief that can result from the phrase "nonrefundable deposit." It doesn’t take someone with a Ph.D. in English to realize that this phrase is a contradiction in terms: A deposit is by nature returnable, so calling a deposit "nonrefundable" makes no sense.

A better description of the amount would be "pet fee," which goes a bit toward removing the confusion. But without a clear explanation in the lease as to how this fee will be used, misunderstandings can still crop up.

In fact, the likelihood of confusion and disagreements has prompted a few states (California, Hawaii and Montana) to prohibit nonrefundable fees altogether.

Properly speaking, a fee is a one-time expense for a specific service or item. It might also refer to an amount of money meant to compensate the landlord for any negative consequences that result from allowing an animal in the rental.

The fee could be used to cover added screening time and costs that a careful landlord will incur when considering an applicant with a pet (savvy landlords screen the pet, too). Or it could be considered compensation for the diminished applicant pool that results when pets are on the premises (some tenants will not consider living in a building with pets, fearful of noise, disruption, allergies or pet waste).

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Most commonly, however, it’s imposed on the assumption that the pet will cause damage, and the landlord does not want to argue about it when the tenancy ends.

When the latter reason is the basis for the pet fee, it behooves the landlord to say so and to make clear that damage clearly caused by the pet will be applied first to the nonrefundable pet deposit/fee before tapping into the refundable deposit.

The lease should also state that the pet fee will not be used to cover human errors, which (if you ask the dogs) are often far more serious.

Some states require explanations, though they need not be so specific: In Arizona, Nevada, Washington and Wyoming the purpose of any nonrefundable fee must be stated in the lease.

Even with a clear clause, there may be instances when it’s hard to determine whether the damage was due to the pet’s activities or the tenants’ carelessness.

Most of the time, however, it’s clear; one would think that apartment-wide scratches on hardwood floors couldn’t reasonably be attributed to the human occupants. That’s the argument you’ll want to make if you end up in small claims court, arguing for the return of the deducted parts of your deposit.

Many landlords who have had hassles over "nonrefundable pet deposits" have come to the conclusion that it’s easier to simply charge one refundable deposit to cover damage regardless of how it happened.

True, they give up the fetching prospect of being able to pocket an entire pet fee when the pet has proved to be a fastidious occupant, but they also avoid arguments about who caused the ripped curtains or carpet stain of unknown origin.

If their state does not set limits on the amount of the deposit — and many do not, such as Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Kentucky, Louisiana, Minnesota, Mississippi, Montana, New York (nonregulated units only), Ohio, Oregon, South Carolina, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, and Wyoming — they simply increase the deposit to cover the damage they think could be caused by the pet’s residency.

Q: The legislature in Maine is considering a bill that would make a landlord responsible for damages caused to a third party by a tenant’s pet — period. That sounds crazy to me, and it will result in the disappearance of pet-friendly rentals. Only homeowners will end up being able to have a dog. Surely this isn’t legal! –Patti M.

A: After reading your question, I thought that surely you had misunderstood the bill. But no, you’ve nailed it. The proposed law is two sentences long: "A tenant and that tenant’s landlord are jointly and severally liable for damages caused to a third party by that tenant’s pet. For purposes of this section, "pet" means any domesticated animal normally maintained in or near the household of its owner" (see HP0062, LD 74).

Boy, they are playing hardball in Maine.

If it becomes law, this bill will mean two things: first, that landlords will be "strictly liable" for the consequences of the acts of their tenants’ pets. This means that they will be legally responsible even if they were not in any way at fault. Conceivably, this would apply even when the tenant keeps a pet in violation of a no-pets clause, and the landlord has not had an opportunity to even find out.

Not very fair, you say, and in fact, strict liability is rare precisely because it isn’t fair. It’s imposed in situations where great harm is at stake, consumers are not in a position to evaluate and avoid a dangerous situation or product, and compensating injured victims is even more important than fairness.

A good example of strict liability is the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) of 1980, which makes landlords responsible for the cost of cleaning up pollution on their land, even if tenants caused that pollution and the landlords didn’t know about it or had gone further and forbidden the polluting activities.

Landlords can turn around and seek "contribution" from the truly responsible parties, but meanwhile the government has gotten its money.

Similarly, manufacturers of consumer goods are frequently held strictly liable for the injuries these goods cause, even if they didn’t carelessly produce them. The rationale is that only the company that makes the goods, not an everyday consumer, is in a position to evaluate the safety of the products it makes.

Although it may seem unfair to slap the manufacturer with responsibility for a defect it could not foresee, it’s less palatable to leave consumers in the lurch.

Secondly, this bill would make a landlord responsible for the entire settlement or award, regardless of fault. The landlord could always turn around and sue the person who is rightly responsible — the tenant — but that’s after the landlord has written a possibly sizable check to the injured party.

It’s not hard to imagine the effect of this bill, should it become law. While an innocent landlord can theoretically sue the tenant for damages it has paid to an injured victim, in practice this will often be a hollow remedy.

Many tenants do not have resources, and in any event, making a landlord sue for contribution is onerous. Understanding this, many landlords will simply refuse to rent to tenants with pets.

Additionally, insurance premiums for landlords’ liability policies are likely to soar because of the landlord’s added responsibility for an entirely new, large pool of risk.

It’s important to understand that people who are injured by tenants’ pets already have a legal remedy against the landlord if the victim can show that the landlord knew, or should have known, of the presence of a dangerous animal on the premises, and failed to take reasonable steps to deal with it.

If the landlord has received complaints about a tenant’s pet or has observed aggressive behavior but has failed to demand that the tenant get rid of the pet or leave, it’s reasonable to lay some of the responsibility on the landlord for ensuing harm.

Several years ago in San Francisco, a dreadful case in which a tenant was attacked and killed by another tenant’s vicious dogs resulted in not only a criminal prosecution against the dogs’ owners, but also a claim by the victim’s survivor against the apartment building’s insurance company.

That claim was proper, and it settled — the resident manager had the opportunity to observe the animals prior to the incident.

Tort law reformers have zeroed in on joint and several liability, arguing that allowing an injured person to collect from the deepest pocket at the defense table is unfair and promotes baseless lawsuits.

This proposed law expands joint and several liability in a context where it is both unnecessary and likely to cause consequences that no one wants: more pets surrendered to animal shelters and fewer pets adopted back out again, resulting not only in higher euthanasia rates but higher costs for the local governments that operate these shelters.

Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord’s Legal Guide" and "Every Tenant’s Legal Guide." She can be reached at janet@inman.com.

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