Three groups of apartment dwellers in Arlington have been left holding the bag for thousands of dollars in security deposits despite a Virginia law intended to protect them, according to tenants and a county official.
The state's Residential Landlord and Tenant Act requires landlords to return security deposits, plus interest and minus any charges for repairs, within 30 days after a tenant moves out. But many tenants have lost their deposits because of the foreclosures and bankruptcy proceedings affecting their landlords, and have gotten conflicting answers when they asked why.
The residents' plight has prompted a re-examination of tenant-landlord legislation to see whether more protection can be provided for renters, said Nancy Johnson of the Arlington County Tenant-Landlord Commission.
The state law clearly says that the owner of an apartment "at the time of termination of the tenancy is responsible for the security deposit," according to Donald Slatton, executive director of the Apartment and Office Building Association, a metropolitan area-wide organization. "If I were a tenant whose deposit was not returned , I would go to small claims court immediately," he said.
Johnson said, however, that "a court decision some time back gave foreclosure law precedence over" measures protecting tenants. She said that, when a property changes hands at a foreclosure sale, the new owner has no obligation for deposits paid by tenants to the last owner.
In fact, as one group of tenants is finding, they not only have no hope of getting their security deposits back, they will have to pay new deposits to the present owners of their apartments. They are residents of 21 apartments in Fairlington, which were condominiums owned by Global Management Enterprises. United Virginia Bank foreclosed on the apartments May 23, and "bought all the units . . . because the bids were not adequate" to cover the bank's investment of more than $2 million in principal and interest, according to Carroll C. Markley, a bank official.
Markley said that "the bank assumes no responsibility and has no obligation for the security deposit. Under Virginia law, a purchaser at foreclosure takes title to property without regard to any liens. So we acquired the property free and clear of any obligations. . . . "
The bank's stance angered tenant Shepard Doniger, who said "we got sparse notification, and I found the people at the bank were cold and not willing to take responsibility for anything."
Rents for the 21 apartments involved range from $500 to $650 monthly, according to Al Thomson, another tenant.
United Virginia Bank recently sold the condominiums to the Fairlington 21 Limited Partnership, with the accounting firm of Beckerman and Asmuth of Alexandria acting as the managers, according to Thomson. Samuel Beckerman, a general partner in the Fairlington company, said the new owners will negotiate new leases and will increase rents by about 5 percent.
"For tenants in jeopardy of losing security deposits , we are trying to make the terms as gentle as possible. We will ask for half a month's rent and give them three months to pay," he said. Rents will range from $600 to $650 monthly after increases.
Another troubled project is Harvey Hall, a 115-unit structure at 850 S. Greenbrier St. Johnson, who is tenant-landlord coordinator for the county Tenant-Landlord Commission, said several renters have left Harvey Hall since its owners have filed for corporate reorganization under bankruptcy laws. "In a bankruptcy, everything is held up," including security deposits, she said.
One former tenant, Baldev R. Sikka, said he has been trying for five months, without success, to get his security deposit back. Sikka moved out last January because the rent had risen by 14 percent within the previous year, he said.
He figures he is owed $460 by the owner, 1979 Equidyne Properties II of New York--$400, the amount of one month's rent, plus $60 in interest, as required by Virginia law. All he has gotten is a check for $300, with a notation that $100 was withheld to cover the cost of repainting the apartment. And that check bounced, he said.
A spokesman for Equidyne said that, although the company is in bankruptcy proceedings, Sikka's security deposit would be returned if he "resubmits" the bounced check. The spokesman, Peter Rock, said in a telephone interview that the Florida company that holds the mortgage on Harvey Hall is managing the property during bankruptcy proceedings.
Another building, an eight-apartment structure at 1914 N. Ode St., was sold at foreclosure early last year, Johnson said. "One tenant sued the former owner seeking a refund of his security deposit and was given a court judgment . . . and the former owner has refused to pay," she said.
The resident, Brian Mahoney, who moved to the District of Columbia last March, said because of the foreclosure "there was no provision for transfer of the security deposits to either the new owner or to the tenants. In addition, despite the leases which we held, the rent was raised almost immediately."
"It should be of interest to others to note that security deposits, as far as the tenant is concerned, are not always secure nor are they much of a deposit," Mahoney said.
Security deposit complaints are "fairly common cases" brought to Legal Services of Northern Virginia, said Charlie Sabatino, managing attorney of the Arlington office.
"A lot of landlords will just pay back security deposits," ignoring the interest they are required to pay if a tenant has lived in an apartment more than a year, said Sabatino. In addition, "there is a great deal of ignorance among tenants as to whether or how much of their security deposits they are entitled" to get back when they move out. The law requires payment of half a percent below the rate set as a maximum interest that can be paid on passbook savings accounts, he said, adding that the interest on security deposits now is 4 1/4 percent.
Sabatino said the landlord and tenant law is complicated. "For a tenant to enforce his rights, he needs to know the law ahead of time and then he needs an attorney to do it for him. These are the most serious flaws" in the law, he said.