I’m in the process of a long, drawn out, extremely frustrating small claims case where I’m suing an old land lord for failure to return my security deposit in full. I’m about to re-open the case for the 3rd time!!! (Don’t ask; the details are long, uninteresting, and irrelevant (unless they are relevant and then I’d be happy to share them, which would surely be cathartic, though undoubtedly more appropriate for the Pit)).
They have screwed me over in big ways and I intend to see this to its end. Now that I’m about to open it a 3rd time, I have to fill out the forms again as if starting from scratch, and I understand that a security deposit accrues interest to account for inflation, which must be included with the return of the deposit. I know it’s only a small amount we’re talking about here, but heck, these people have stuck it to me so much that any little bit I could legally tack onto my case can only help.
So the details:
$400, 10/mos. (9/00 - 7/01)
New York State
I would use a renters index or something similar, as long as it is going up. This is more of a ratio of prices than anything else, but the indexes tend to fluctuate more than interest rates and could be to your benefit.
And as for the interest, is it a simple interest or compound? Simple might give you too little and compound too much. What were the available interest rates at that time?
You have to check the inflation for the time period, too much above it and you will be “caught” lying. And it seems like they might have the right to earn more than inflation and keep the balance. After all that is what your bank is doing with “your” money, they lend it and make more than what they have to pay you in interest. Thus the only thing to show is the inflation index to get the “correct” amount. But you would be more of an expert on that than I would.
OK, so I guess my question to you all is how do I find out the interest rate and how it is compounded? Is this determined by the state? the Feds? County? Community? etc.
Is there a publicly available resource I could check for this info?
Well, what interest rate are you looking for? Federal funds? Prime? The one your local bank quoted for savings accounts in September 2000? LIBOR?
You say that “a security deposit accrues interest to account for inflation.” Who told you this? Is it written in the lease? Advice given to you by a local tenants’ rights group, based on local ordinances?
The short of it is, “interest rate” can be anything. There certainly isn’t a national “interest rate” that is applied to outstanding security deposits, and I highly doubt there’s a statewide one (NY) for that matter. The best source of exactly what “interest rate” is to be used is whatever your source was that told you that you can apply interest to your security deposit. If you can tell me which rate you’re looking for, I can easily tell you the public source for it.
OK, well I must admit my sources are simply a few various anecdotal accounts. I simply mentioned my situation to friends and people, and a few different ones on different occasions said something like: “hey, you know you’re also entitled to interest on your security deposit. Most people don’t know this so landlords never really account for it.”
So I guess my first question should’ve been “Is that true?”
OK, so you’re saying there’s no official standard interest rate on a security deposit? Is this the kind of thing that must be agreed upon and stipulated in a lease on an individual basis? And as it wasn’t it my case, does this mean I’m actually not entitled to any interest?
Isn’t there a national rate of inflation that could be applied according to the logic that x dollars at t[sub]1[/sub] is actually worth x + (x(rate of inflation)) at t[sub]2[/sub]?
The last bit first: sure, you could take a generally agreed upon rate of inflation (say, CPI, all urban consumers, from Sept 2000 to July 2001). The hard data would ultimately come from the good folks at the Bureau of Labor Statistics: http://www.bls.gov. Later I can look up exactly what this rate would be from the two time periods cited.
Now, the question is, are you in fact entitled to some kind of interest on your security deposit? IANAL, let’s get that out of the way. First, there may be some local ordinances governing the rights of tenants in your neck of the woods. If so, and they do state that you get interest on your outstanding security deposit, then they probably outline exactly what that interest rate is. They may in fact be tied to the Consumer Price Index.
Possibility the Second: a small-claims court judge may decide you get interest as a civil matter. Then, the judge will decide exactly what rate is “fair.”
Very Remote Possibility the Third: The lease may state something about interest on security deposits, but this is extremely doubtful. I work in the multi-family housing business, and I’ve never ever seen a lease drawn up like that. They’ll go into lengthy detail as to how you can get less money back, but nothing about getting more money back.
You’re best option is to see if there are any non-profit “tenants’ rights” organizations around. These guys will be familiar with your local ordinances and statutes and whatnot. And even if there isn’t a specific ordinance about interest on security deposits, you might could claim it anyways and the worst the judge can do (I believe, IANAL!!!) is say “no.” In this case, tying it to the CPI is probably your best, and most conservative, bet. It’s awfully hard to argue that you shouldn’t at least get an adjustment just to deal with inflation… if we were talking about a larger sum of money, I think you could even tie it to a nice, non-risky fund such as 10-year Treasury Notes.
I’d check state law. For instance, in my state (Ohio), deposits over one month’s rent accrue interest, but deposits equal to or under one month’s don’t accrue interest.
I imagine that law states the interest the money accrues, as well.
I don’t think I’m going to bother with it, as it’s likely a pretty small amount.
In case you’re interested:
I followed sailor’s lead with that google thing that the kids are using so much these days and found this
The landlord certainly never informed me of any bank that he may have deposited my money in, but regardless, given the example in the quote above (conveniently the exact same amount as in my case!!), as well as the state of the economy (pre-9/11 yes, but still not great IIRC) and thus the likelihood of a very low interest rate, along with the 1% the he could have deducted for himself, the amount we’re talking about is probably of less value than the energy I’d have to expend to figure out exactly what that amount actually is.
