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HB 488 Factsheet

HB 488 – amending the Security Deposits Act so that a landlord who has a pending court action against the tenant does not have to allow the departing tenant 24 hours to complete any additional cleaning identified by landlord as necessary, and does not have to provide the tenant with a list of deductions from the deposit within 30 days of move-out 

 

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HB 488 would negatively impact renters in Montana. In summary, this bill, if passed, would make it easier for landlords to retain a tenant’s security deposit when the landlord has a lawsuit pending against the tenant.

 

HB 488 includes these changes:

 

  • Makes the Security Deposits Act applicable to public housing authority rentals (p. 1, lines 15-16). This change is not a significant concern for renters because housing authorities already generally follow the procedures in the Act, even though the current Act specifically excludes housing authorities from coverage.

  • Takes away the tenant’s opportunity to do additional cleaning of the rental within 24 hours after receiving the landlord’s notice that additional cleaning is required, if two conditions apply: 1) if the landlord has terminated the tenant’s lease pursuant to 70-24-427 or 70-33-427, and 2) if the landlord has a pending lawsuit against the tenant for actual damages.

  • Takes away all of the landlord’s obligations set out in 70-25-202 if two conditions apply: 1) if the landlord has terminated the tenant’s lease pursuant to 70-24-427 or 70-33-427, and 2) if the landlord has a pending lawsuit against the tenant for actual damages.  (p. 3, lines 5-6). The landlord’s obligations which would be negated include the requirement for a landlord to return the tenant’s deposit in full within 10 days if there are no deductions, and if there are deductions, the requirement to send the tenant a list of those deductions and to pay tenant the difference within 30 days after the tenant moves out. 

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Current law requires the landlord to do certain things before retaining any portion of the tenant’s security deposit. After the landlord inspects the rental unit, these are the landlord’s next steps:

  1. If additional cleaning is needed, Landlord must give Tenant a written notice specifying the cleaning needed and giving Tenant 24 hours to clean. If no cleaning is needed, then Landlord doesn’t have to give the cleaning notice. If Tenant didn’t give Landlord any notice that Tenant was moving, then Landlord doesn’t have to give Tenant the 24-hour notice before deducting for cleaning expenses.  

  2. If there is no cleaning needed and there are no other deductions from the deposit, Landlord must return deposit in full to Tenant by mail to Tenant’s last known address within 10 days after Tenant moves.

  3. If the Landlord makes any deductions from the security deposit, Landlord must send Tenant an itemized list of deductions along with remainder of deposit (if any) by mail to Tenant’s last known address within 30 days after the tenancy terminates, or within 30 days after Landlord accepts the leasehold premises, whichever occurs first. If Tenant gave notice of moving, Landlord cannot deduct any money for cleaning charges unless Landlord first sent the 24-hour notice referenced in step 1. 

 

The passage of HB 488 would mean that a landlord who has already filed a court action against a tenant for actual damages would NOT have to give the tenant the opportunity to do the additional cleaning, and would NOT have to give the tenant the list of deductions from the deposit within 30 days. Strangely, the landlord would still have to give the tenant the written notice identifying the cleaning needed (p. 2, lines 1-3), but would not have to give the tenant 24 hours to complete the required cleaning (p. 2, lines 4-5).  Also, the proposed amendment to 70-25-201 totally exempts the landlord from having to send the tenant any list of deductions or any refund when the landlord’s court case for actual damages is pending against the tenant. The landlord with a pending court action for actual damages need not send the tenant any notice concerning the security deposit, except for the cleaning notice required by 70-25-201(3).

 

These changes negatively impact tenants for at least these reasons:

 

  1. Not allowing tenants to do additional cleaning makes it more likely that landlords will be able to charge tenants for the costs of the additional cleaning. Why not just let the tenants do the cleaning, as current law allows? The landlord still gets what it wants, which is for the cleaning to be done.  And if the tenant chooses not to do the additional cleaning, the landlord still has the option to deduct those costs from the deposit. The fact that the landlord’s court case is pending should not change whether the tenant is given the option to do the additional cleaning.

  2. ​Allowing a landlord to retain a tenant’s security deposit indefinitely, while waiting for a court decision, with no list of deductions and no explanation sent to the tenant, is patently unfair to the tenant. The amount of a deposit is substantial -- in Montana, there are no limits on how much a landlord may charge as a security deposit.

  • Landlords generally charge one or two months' rent as a security deposit, and sometimes also charge a separate pet deposit. A tenant may have paid $3,000.00 or more to a landlord as a deposit upon move-in.

  • Tenants cannot afford to wait for months to receive their deposits back – they need that money to put toward new rentals.

  • Landlords who have pending court claims should not be treated differently from landlords who do not have lawsuits pending.

 

If HB 488 is passed, it would incentivize landlords to file court cases alleging actual damages against tenants, because then the landlords can keep the security deposits in full until such time as the court decides the court case.

  • It could take more than a year after the tenant leaves the Montana rental to finalize the court case, and if the tenant moves out of town or out of state, the tenant may fall out of contact with the court, especially if the tenant is unrepresented.

  • If the tenant doesn’t show at the eventual trial in the court case, the tenant will lose by default.

  • The end result of HB 488’s changes are that landlords could end up keeping tenants’ deposits in full, even if there was no legal basis to retain the deposits, as a result of the landlord filing the court action for damages against the tenant. 

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