Are Security Deposits “Property” in Washington?

Author: Michael Kutzner

Guest Editor: Kiran Gupta


Background

In an attempt to improve living conditions and balance the bargaining positions of landlords and tenants, Washington passed the Residential Landlord-Tenant Act of 1973 (RLTA)i. The RLTA required both landlords and tenants to abide by certain regulations and provided remedies for breach of the regulations. The RLTA did not specify a statute of limitations for actions brought under the act.


Recent Case Law:
Silver v. Rudeen Management Company, Inc.

The Washington Supreme Court recently reviewed a case brought by plaintiff Thomas Silver (“Mr. Silver”).ii Mr. Silver had entered into a residential lease agreement with Rudeen Management Company (“Rudeen”) and as part of the agreement, he paid a refundable $300 security deposit. After three years, Mr. Silver gave proper notice to terminate his tenancy, but Rudeen kept Mr. Silver’s security deposit.

After Mr. Silver moved out, Rudeen sent Mr. Silver two documents regarding the security deposit and claimed there had been excessive wear and tear to the apartment. The first document, titled “Preliminary Deposit Disposition,” was provided to Mr. Silver on the date he moved out and informed Mr. Silver he owed $3,000 for the excessive wear and tear. The second document, titled “Final Deposit Disposition,” was provided to Mr. Silver 35 days later, and notified Mr. Silver he owed $2,281.35 for excessive wear and tear even after the $300 damage deposit was applied to his outstanding balance. Rudeen included invoices for work performed in the apartment with the second document.


Procedural History

Over two years later, Mr. Silver filed suit to recover his $300 deposit. Among other allegations, he alleged Rudeen violated the RLTA because the two documents did not amount to a full and specific statement for retaining his deposit within 14 days after he vacated the premises. He argued the document titled “Preliminary Deposit Disposition” was not a full and specific statement. Mr. Silver also argued that even if the document titled “Final Deposit Disposition” was a full and specific statement, it violated the 14-day rule under the RLTA.

Rudeen filed a motion to dismiss, arguing a two-year catchall statute of limitations should apply. The trial court granted Rudeen’s motion and dismissed the case with prejudice. It also awarded Rudeen costs and attorney fees in the amount of $15,225.50. Mr. Silver appealed the Superior Court decision, and the Court of Appeals affirmed the lower court’s decision. Mr. Silver petitioned the Washington Supreme Court to review his case, which they granted.


Analysis

A security deposit provides security for performance. No part of the deposit belongs to the landlord unless and until the tenant breaches.”iii The landlord may keep all or part of the deposit, but only to the extent a tenant breaches the duty to keep the apartment clean and refrain from causing damage or committing waste.

The court looked to RCW 4.16.080, which limits actions to three years for “[a]n action for taking, detaining, or injuring personal property, including an action for the specific recovery thereof, or for any other injury to the person or rights of another not hereinafter enumerated.” It rejected the catchall statute, RCW 4.16.130, which was utilized by the lower courts. The court held the three-year statute of limitation applied because a tenant’s action to recover their deposit based on the landlord’s alleged violation of the RLTA was an action to recover personal property. The court found the RLTA must be construed liberally in order to accomplish the purpose for which it is enacted.iv It held Mr. Silver’s filing was timely under the three-year statute of limitations and reversed the lower courts’ decisions.

In addition, the RLTA contains a provision allowing a tenant to recover costs and reasonable attorney’s fees. Mr. Silver requested, and was awarded, costs and reasonable attorney fees, contingent on whether he won in the trial court.


Conclusion

Common sense dictates money is property. Unfortunately, the lower courts focused on the act of returning the damage deposit rather than what Mr. Silver sought relief for which was his money. Mr. Silver was not concerned with how his money was returned to him, he simply wanted it returned. The Washington Supreme Court recognized his foundational argument and thus, granted his request.

i Ch. 59.18 Revised Code of Washington (RCW)

ii Silver v. Rudeen Management Company, Inc., WL 1568850 (2021).

iii 17 WILLIAM B. STOEBUCK & JOHNW. WEAVER, WASHINGTON PRACTICE: REAL ESTATE: PROPERTY LAW § 6.53, at 398 (2d ed. 2004).

iv State v. Douty, 92 Wn.2d 930, 936, 603 P.2d 373 (1979); cf. Randy Reynolds & Assocs. v. Harmon, 193 Wn.2d 143, 156, 437 P.3d 677 (2019) (Chapter 59.18 RCW is a “statute in derogation of the common law and thus [is] strictly construed in favor of the tenant.”).

Copyright © 2001–2022 Tyson & Mendes LLP. All Rights Reserved. Website by Big Behavior.