Can landlord offer the $3,000 HAFA relocation assistance in lieu of security deposit refund?

Asked over 2 years ago - Phoenix, AZ

As landlord, I have been pre-qualified for a short sale under HAFA. As the landlord, I can also request $3,000 relocation assistance for the tenant under the program. Tenant is on month to month and willing to move at (or around) closing time. Can I have a written agreement with the tenant that if the $3,000 is approved and paid out, that this will be in lieu of any refund of security deposit?

Loan is current, but tenant deposits have been exhausted maintaining the property. If deposits have to be refunded, the mortgage payments will have to go in to default to recoup the deposit amounts. If in default, most likely will no longer qualify for this program. The refundable deposit is about 1/2 the $3,000.

Attorney answers (2)

  1. Douglas Garth Edmunds

    Contributor Level 13


    Lawyer agrees


    Answered . Your thoughts are not leading down a safe path. Security deposits are very closely protected under Arizona law. If they are not returned, and the tenant is due a refund, you simply lose. I am not sure why you are concerned about this issue. The deposit does not need to be returned until after the tenant has vacated and time has passed. Why not (1) sell the house; (2) collect your $3,000 at close of escrow; and (3) pay the $1,500 to the tenant later that afternoon?

    While you and your tenant can make agreements, you should be very careful since the security deposit issue is controlled by statute.

    Douglas Edmunds is in the business of helping people and companies file for bankruptcy protection. The bankruptcy... more
  2. Jennifer Peddy Berg

    Contributor Level 7


    Lawyer agrees


    Answered . I agree with Mr. Edmunds, your thinking sounds very dangerous. Security deposits are not supposed to be used to maintain the property, that is your separate obligation as the landlord and owner of the home. But you do not need to return the security deposit until after the tenant has moved out, so it gives you some time to come up with the money. You may be able to make a deal with the tenant, but I would make sure you have an attorney draft/review the documentation to ensure it protects you. Do you have any leverage to entice the tenant into making this deal? Seems like you are going to need something to convince the tenant to forgo the $1500 deposit.

    Ms. Peddy Berg is licensed to practice law in Arizona and California (currently inactive); and her office is... more

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