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On A Security Deposit Disposition A Washington Residential Landlord Must Use ‘Actual Damages’ And Not ‘Estimated Damages’ – RCW 59.18.280

When seeking to retain a security deposit a Washington State residential landlord must list ‘actual’ damages on a security deposit disposition form and cannot use ‘estimated’ damages unless the landlord strongly shows circumstances beyond their control which prevents the landlord from obtaining accurate bids during the 14 day period.

A security deposit is money given by a residential tenant to cover any unpaid rent or damages when the tenant vacates the property.  RCW 59.18.280 requires that if a landlord seeks to retain all (or a portion) of the security deposit that the landlord provide a written disposition of the security deposit within 21 days of the tenant vacating the property or when the landlord obtains possession.

Most security deposit disputes between landlord and tenants usually occur because either the landlord failed to properly issue the disposition form or the landlord failed to adhere to the strict 21 days given the landlord to issue the deposit disposition.  So many landlords are sued by their former tenants in small claims court that the Spokane County Small Claims Department even has a special block on the small claims complaint form for this cause of action.  Rarely do landlords win these types of disputes.

However, in the summer of 2014 a Spokane County landlord chose to actively contest a claim by a tenant that even though the landlord did timely issue the disposition form that the disposition was defective because the landlord listed ‘estimated’ damages as opposed to ‘actual’ damages.  Most surprisingly, the landlord lost at the Small Claims Department but then appealed the decision to the Spokane County Superior Court.

On March 21, 2014, Judge Harold D Clarke III issued a ruling (Goodeill vs. Madison Real Estate, 13-2-04816-1) reversing the Small Claims Department and found that the landlord had properly issued the deposit disposition using ‘estimated’ damages as opposed to ‘actual’ damages as advocated by the tenant.

Subsequently, both parties sought discretionary review of this ruling by the Court of Appeals, Division III (No. 32442-7-III) which was ultimately granted by the Court of Appeals. The Court of Appeals accepted review due to the strong public interest of clarifying this issue so that landlords and tenants would have definitive guidance in this area of the law.

On November 3, 2015, the Court of Appeals found in favor of the tenant finding that the landlord failed to timely provide an accurate disposition within 14 days as the landlord failed to demonstrate an active or passive delay sufficient satisfy RCW 59.18.280. In other words, the landlord did not strongly demonstrative circumstances beyond their control which is an exception to the 14 day rule.

As it stands right now, a landlord must issue a deposit disposition using ‘actual’ damages as the landlord may lose in court if they try to raise the defense that they couldn’t get the active bids due to circumstances beyond their control. 

Below are the pleadings in this matter and RCW 59.18.280.

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RCW 59.18.280

Moneys paid as deposit or security for performance by tenant — Statement and notice of basis for retention — Remedies for landlord’s failure to make refund.

Within fourteen days after the termination of the rental agreement and vacation of the premises or, if the tenant abandons the premises as defined in RCW 59.18.310, within fourteen days after the landlord learns of the abandonment, the landlord shall give a full and specific statement of the basis for retaining any of the deposit together with the payment of any refund due the tenant under the terms and conditions of the rental agreement. No portion of any deposit shall be withheld on account of wear resulting from ordinary use of the premises. The landlord complies with this section if the required statement or payment, or both, are deposited in the United States mail properly addressed with first-class postage prepaid within the fourteen days.

The notice shall be delivered to the tenant personally or by mail to his or her last known address. If the landlord fails to give such statement together with any refund due the tenant within the time limits specified above he or she shall be liable to the tenant for the full amount of the deposit. The landlord is also barred in any action brought by the tenant to recover the deposit from asserting any claim or raising any defense for retaining any of the deposit unless the landlord shows that circumstances beyond the landlord’s control prevented the landlord from providing the statement within the fourteen days or that the tenant abandoned the premises as defined in RCW 59.18.310. The court may in its discretion award up to two times the amount of the deposit for the intentional refusal of the landlord to give the statement or refund due. In any action brought by the tenant to recover the deposit, the prevailing party shall additionally be entitled to the cost of suit or arbitration including a reasonable attorney’s fee.

Nothing in this chapter shall preclude the landlord from proceeding against, and the landlord shall have the right to proceed against a tenant to recover sums exceeding the amount of the tenant’s damage or security deposit for damage to the property for which the tenant is responsible together with reasonable attorney’s fees.

[2010 c 8 § 19027; 1989 c 342 § 9; 1983 c 264 § 7; 1973 1st ex.s. c 207 § 28.]

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