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I'm a CA Landlord. I filed Ch 7 BK & included my tenants security deposit. My BK was discharged. Must I still return deposit?

Trabuco Canyon, CA |

Is the security deposit considered a "discharged debt" or, though included in BK, was it not considered a debt, but "monies held in trust" meaning I still have to pay it even though my BK was discharged? My tenant is moving and I don't know what my obligations are.

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Attorney answers 3


The money was held in trust, otherwise it would have been considered an asset which the trustee could have taken. The tenants moving out is a post-filing event which triggers the lease agreement requirement for an accounting for damages and unpaid rent, if you have such a written agreement, and refund of the balance. Regardless of whether you have a written lease or not, state landlord tenant laws have to be abided by. I am assuming by your question that you still have the rental property and it was not taken by the trustee.

This is general information and can not be relied on as legal advice


A refundable security deposit is not your money unless and until upon move out there are damages beyond regular wear and tear or cleaning that you must do to make the place rentable. If tenant leaves property in good condition, they are entitled to a refund of the deposit. The deposit is neither your debt nor asset so disclosing it was well and good but it's funds you are holding for someone else.


According to California law, you as a landlord, must maintain yout tenant's deposit in a trust account for your tenant's benefit. Also, you must refund any and all interest earned on that account to your tenant. All my colleagues are correct in their analysis that the monies held in trust are not yours, nor are thgey assets of ytour estate, otherwise the BK trustee would have taken possession of those funds. Best of luck.

I am licensed only in California. This information is good only in California and it is not to be taken as legal advise in any other type of situation.

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