Levying Security Deposits

Can You have the sheriff levy on the landlord's security deposit in the name of your judgment debtor? Can the landlord brush you off by claiming that they have to keep the security deposit until your judgment debtor moves? At court, landlords very often win 3rd-party claims on rental deposits.

I'm a Judgment referral expert, not an attorney. This article is only my opinion, please consult with an attorney if you require legal advice.

Very often, even when you get your assignment order approved on what is left over in the rental security deposit when the debtor moves; sometimes when your debtor learns they won't be getting their security deposit, they just don't pay their landlord the last month of rent, and there's no security deposit remaining when the debtor moves out.

Even when a landlord is just keeping your judgment debtor's funds, certain judges think deposits are theirs as security for the debtor's property rental agreement, and they'll allow it to be turned over only after a successful completion of the rental agreement. Certain judges don't even let you subpoena landlords to appear personally at court think that is harassment. Some judges have the opinion that you can get what you require from a landlord just by subpoenaing records.

You might subpoena the landlord's banking statements if your judgment debtor is paying rent with direct deposit, or paying their rent in some other way which don't let you determine where the debtor's funds are coming from; without harassing them.

Usually, the amount of money in a security deposit isn't worth fighting the landlord's exemption claim, unless it's an expensive property. When you fight this kind of claim, be ready to pay the landlord's lawyer expenses. Professional judgment recovery specialists try them occasionally, but if a landlord files a 3rd-party claim on the deposit, they don't fight the landlord's claim, they simply drop the matter.

Within California, the landlord's lawyer may point out the CCPs (the California Code of civil Procedures), the part which specify what properties are exempt from creditor executions. One CCP implies that security deposits are not transferable or assignable by a judgment debtor, except to their landlord. The landlord's lawyer may argue, although the CCP isn't that specific, it makes sense that the security deposit isn't subject to creditor executions. At this point, you'll most likely lose the challenge to the 3rd-party claim.

The tenant's deposit is assignable to their landlord. Renters do this often when authorizing their landlord to deduct from their security deposit for repairs (the language is often within the rental agreement) and to pay all or a portion of the final month of rent. This is covered by California Code 1950.5(h). Because these security deposits are assignable, and since they are the property of the renter, not their landlord, they're subject to creditor executions. Whether the court permits this is more of an art than science.

One could attempt to claim that the deposit the landlord is keeping is by law, property of the debtor, held by their landlord, so it 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. As you would expect, bringing up these laws isn't an automatic win.

Often, judges uses a "Motion for Turnover Order, for GGGGG, Third Party Holding Assets of YYYY, Judgment Debtor" as a chance to look at the hearing as a potential exemption claim for your debtor. Some judges order the deposit to be turned over only when they think the debtor can repay them to the landlord. If not, as a public policy matter, judges isn't going to order a security deposit to be turned over if that results in the eviction of your debtor renter, especially when minor children are affected.

There's no guarantee thatyou will win a challenge to a 3rd-party claim. To summarize, one can give rental deposit levies a shot, however don't push it too much when the landlord files a claim. The more relevant California laws are below:

Civil Codes:

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.

Mark Shapiro - Judgment Broker - http://www.JudgmentReferral.com - where Judgments go and are quickly Collected!

This article was published on 20 Aug 2014 and has been viewed 764 times
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