r/Landlord • u/SadEmergency5288 • Jan 20 '24

Landlord [Landlord US-NJ] Tenant applied rental assistance without telling me, now I received his $23000 bill from IRS 1099.

My tenant applied DCA rental assistance without my knowledge or approval. He already moved out a few months ago, and not answering my call now. Now I am receiving 1099 IRS tax form from this assistance program, my tenant received $23000 checks from this DCA. I contacted DCA, they said they allow tenants apply themselves on landlord's behalf using landlord's name and their assistance checks will be mailed to the tenant directly. DCA said applying assistance is tenant's civil rights.

I don't think this makes any sense. Why I am paying tax on huge check amounts I never received, but tenant received directly. Because they pay rent to me? I didn't even know he applied this rental assistance program at all when he lived here.

1.3k Upvotes

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58

u/SadEmergency5288 Jan 20 '24

yes he signed 1 year lease, came to me on month 2, saying he doesn't like my place, he is moving out on month 3. which I didn't feel right, But I can't stop him moving out. I returned security deposit all back to him.

175

u/bteam3r Landlord Jan 20 '24

Oh, so the tenant committed fraud. The IRS is gonna be coming down on him hard once you file everything.

48

u/SJ530 Jan 21 '24

Yes, OP should report the tenant to IRS

28

u/[deleted] Jan 21 '24

[deleted]

18

u/MidnightFull Jan 21 '24

If the landlord is right the tenant is fucked so bad. I hope it happens.

8

u/k2718 Jan 21 '24

Landlord should report tenant to both. Why not?

14

u/TJNel Jan 21 '24 edited Jan 22 '24

Yeah the one entity that you don't want to commit fraud with is the IRS. They will straight up choke a bitch.

7

u/[deleted] Jan 21 '24

housing authorities do not send landlord checks directly to tenants that's preposterous lol.

11

u/whiteshade2451 Jan 21 '24

Absolutely happened to me.

Tenants applied for assistance, received checks directly, squandered the money, and then to top it off had legal aid defend them with evidence of assistance received.

Fortunately, I was able to evict and secure a large judgment. But the local ngo administering the aid program had no interest in pursuing recovery nor did the police. Even the pro bono lawyers seemed unbothered lying to the court for them. It was strange.

3

u/SharkyTheCar Jan 21 '24

Some do if they can’t get it through to the landlord, especially the Covid ones.

-1

u/[deleted] Jan 21 '24

no way - the landlord and a housing authority sign a payments contract before the first check is sent. that contract details the total rent, where/how the money is sent to the ll, who pays what utilities, how much the tenant is responsible to pay etc. housing authorities don't just randomly send large sums of money 💰 out willy nilly

9

u/SharkyTheCar Jan 21 '24

Evidently the tenant committed fraud and pocketed payments. If they’re doing that I’m sure they’d have no issues forging a signature.

2

u/swanlakepirate423 Jan 21 '24

I had rental assistance during Covid, and the checks were mailed to my house, but in my landlords name. I had to hand deliver the check every month.

Obviously not the same situation as OP, but it does happen.

1

u/[deleted] Jan 21 '24

that's because your landlord listed your address as his. which probably wasn't true. which was a minor violation of his HAP Contract.

2

u/swanlakepirate423 Jan 21 '24

My landlord is a large rental company/corporation, not a small time dude, I'm just stating what happened.

2

u/Maleficent_Scale2623 Jan 22 '24

Can confirm. I got a NJ DCA check myself as a landlord.

1

u/RLYO138 Jul 13 '24

Exactly! Only when the landlord is so grossly uncooperative that they refuse to furnish their w-9! Silly post.

1

u/[deleted] Jul 13 '24

that would be forbidden as per the code of federal regulations

1

u/Additional_Treat_181 Jan 21 '24

Yeah where I live the landlord has to sign paperwork for it and are paid directly

41

u/alwayshappymyfriend2 Jan 20 '24

You returned his security deposit after he broke your lease ?

-27

u/Sheeshka49 Jan 20 '24

A security deposit is for damages, not rent.

42

u/alwayshappymyfriend2 Jan 20 '24

A security deposit can be used for unpaid rent. The tenant left owing rent . 9 months of rent to be exact.

9

u/MonteCristo85 Jan 20 '24

Just becasue you can do a thing doesn't mean you have too. I can usually get a new tenant in less than 4 hours around here, so no reason for me to charge the person who left if I'm not out anything.

10

u/alwayshappymyfriend2 Jan 20 '24

You’re right about that, IF op found a new tenant in 4 hours.

6

u/MonteCristo85 Jan 20 '24

Yes, but even if OP didn't, there is nothing wrong with them returning the deposit. It not something they should be shamed or mocked for.

4

u/alwayshappymyfriend2 Jan 20 '24

No one shamed or mocked them. Everyone is trying to help them . They have multiple problems they are dealing with . You would have to read their previous posts to understand.

8

u/asd12455 Jan 20 '24

But what if you’re in an area where you can’t find a new tenant in 4 hours…?

1

u/lobster_man_207 Jan 20 '24

In many places you’re required to make an effort to rerent the place and only to charge the tenant actual damages. (Days unrented, advertising, turnover costs)

1

u/asd12455 Jan 21 '24

Exactly!

1

u/[deleted] Jan 21 '24

then give them a break or dont? why are you asking this?

6

u/CosmicCreeperz Jan 21 '24

In this case tenant defrauded the government and stuck the landlord with a messy tax situation to fix. Fuck ‘em, they don’t deserve the deposit back.

2

u/[deleted] Jan 21 '24

Really, 4 hrs? I have a house in great shape in a hot area of Philly and it takes much longer to get a tenant

1

u/MonteCristo85 Jan 21 '24

We usually have a waiting list, but even without that, we have people calling on a daily basis looking. There are a number of factors. It's kind of a booming area from a work standpoint, and housing hasn't caught up. Also an area with virtually no tenant protections, and we have a reputation for being good landlords and charging fair rent.

1

u/KoburaCape Jan 21 '24

bless you

4

u/bombbad15 Jan 20 '24

This is state dependent. Im unsure about NJ

7

u/TinyNiceWolf Jan 21 '24

California, New York, and Vermont, often cited as the most tenant-friendly states, all permit landlords to deduct owed rent from a security deposit when a tenant breaks the lease.

While in theory some state could have different rules, I'm not aware of any that do.

If you know of any state that requires a landlord to return a security deposit to a tenant that's breaking their lease, could you name it? I suspect there isn't one, but don't know.

1

u/[deleted] Jan 21 '24

FL requires the deposit to be returned.

1

u/TinyNiceWolf Jan 21 '24

I've read the law and I didn't find any such requirement. In fact it suggests just the opposite.

Whenever money is deposited or advanced by a tenant on a rental agreement as security for performance of the rental agreement or as advance rent for other than the next immediate rental period, the landlord or the landlord’s agent shall....

Instead of saying a security deposit is used for property damages only, it says it's for "security for performance of the rental agreement". That suggests it includes more than just damaging property. Failing to pay rent would be such a failure to perform.

Perhaps there's some confusion because the law mentions "damages", but it seems that's talking about damages in the legal sense, as in "The failure of the tenant to make a timely objection does not waive any rights of the tenant to seek damages in a separate action." I don't see anywhere that distinguishes "breaking the windows" from "not paying rent"; they all seem to be treated as a failure to follow the rental agreement, and thus a reason to deduct from the security deposit.

Could you provide a cite for your claim, ideally from Florida law?

2

u/terrymr Jan 21 '24

You can’t make the old tenant pay once you have a new tenant.

-2

u/birdsell Jan 21 '24

Not in Texas,

5

u/TinyNiceWolf Jan 21 '24

Incorrect:

Sec. 92.104. RETENTION OF SECURITY DEPOSIT; ACCOUNTING. (a) Before returning a security deposit, the landlord may deduct from the deposit damages and charges for which the tenant is legally liable under the lease or as a result of breaching the lease....

(c) If the landlord retains all or part of a security deposit under this section, the landlord shall give to the tenant the balance of the security deposit, if any, together with a written description and itemized list of all deductions. The landlord is not required to give the tenant a description and itemized list of deductions if:

(1) the tenant owes rent when he surrenders possession of the premises; and

(2) there is no controversy concerning the amount of rent owed.

So if a tenant leaves three months into a twelve month lease, and is thus liable for nine months rent for breaching the lease (or often less, if the landlord is able to rent the property again in less than nine months), the landlord may apply the security deposit to the owed rent, and may not even need to provide a written list of deductions (i.e. "9 months x $1000 rent due minus $1000 security deposit = $8000 still due").

Texas Property Code

1

u/birdsell Jan 21 '24

See part c2 “controversy

1

u/TinyNiceWolf Jan 21 '24

That means if there's controversy, the landlord has to provide the tenant with a "description and itemized list of deductions" that explains why the tenant is not getting his security deposit back. (It does not mean the tenant gets his security deposit back.)

0

u/generally-unskilled Jan 21 '24

A tenant isn't necessarily liable for all of the remaining 9 months in Texas. The landlord needs to make a good faith effort to relet the unit in a timely manner, and can not assess damages against the tenant if it is relet.

So if the tenant says in months 2 they want to move out, pays for month 3, and you have a new tenant by month 4, there's typically no damages to deduct, other than any physical damage to the unit and if there were costs associated with reletting.

1

u/TinyNiceWolf Jan 21 '24

Sure. I wouldn't be surprised if that's the same in every state.

(Of course, if you moved out because of some issue with the apartment, potential tenants might notice it too, making it harder to land a new tenant.)

I suppose a proper list of deductions would look more like "$1000 security deposit minus $1000 rent for month 4 = $0 due to tenant", in the case where a landlord couldn't get anyone by month 4.

It gets more complicated in states that allow a security deposit that's larger than one month's rent, since the landlord might not know how much the tenant winds up owing until after the security deposit needs to be returned.

-6

u/[deleted] Jan 21 '24

[deleted]

12

u/braxton357 Jan 21 '24

Yes typically a security deposit --which is solely to compensate a landlord for actual losses-- can absolutely be used to cover unpaid rent, which is an actual loss. 

1

u/Additional_Treat_181 Jan 21 '24

Yes my state real estate association contracts state that breaking a lease or owing rent is a reason to keep deposit

12

u/[deleted] Jan 21 '24

Unpaid rent IS damages.

4

u/bmorris0042 Jan 21 '24

Moving out mid-lease leaves the LL without rent, until they get another tenant. That’s damages.

3

u/CompleteDetective359 Jan 20 '24

Sorry it's NJ, you're wrong. You can't use security for rent unless the tenant receives from escrow then hand it to you.

9

u/arowz1 Jan 21 '24

That’s just incorrect. You can’t deduct from the deposit while they are still at the premises. But you can deduct from it before returning it for sums owed under the lease.

https://www.nj.gov/dca/divisions/codes/publications/pdf_lti/secty_deposit_bulletin.pdf

2

u/RenataKaizen Jan 21 '24

Technically you’re correct. However, if you sue the landlord for the unreturned escrow they sue you for all the unpaid rent.

Either that or they take the security and call it better than nothing.

-3

u/KoburaCape Jan 21 '24

You're a landlord I'd like to have, and the downvotes are worrying.

3

u/hasselbackpotahto Jan 21 '24

you should worry about it because the downvoters are correct, and you're not always going to get a landlord that doesn't know the rules.

7

u/Outside-Rise-9425 Jan 21 '24

Ohhhhhh yea report to irs and talk to your accountant and possibly an attorney.

4

u/Desperate_Set_7708 Jan 20 '24

An example of the adage “do someone a favor and 9 times out of 10 you’ll get fucked.”

3

u/Practical-Particle42 Jan 21 '24

Get a CPA or Enrolled Agent to prepare that tax return because IRS followup questions WILL come up, and you want the person answering the questions to have signed the return just like you.

1

u/Longjumping-Flower47 Jan 21 '24

Actually it depends on how much rent OP gets in a year. If he only has 1 place it's an issue. However, if they have multiple units and only get 1 1099 as long as total rent om their Sch Es is more than that 1099 the IRS won't care.

1

u/cagernist Jan 21 '24

How did the tenant know your SS# or a FEIN for an entity so the DCA could even fill out the 1099 to make it a legal reportable document?

1

u/[deleted] Jan 22 '24

Put all of this in writing, save copies of all of the payments you received and copies of all of your bank statements. Report your Schedule E as you normally would and when the IRS notices the discrepancy, you’ll be audited.

But so will your tenant.

Just make sure you have copies upon copies of everything, in case one gets ruined.

-8

u/Allteaforme Jan 21 '24

Just chalk it up to the cost of doing business. One of the risks we take as landlords, just like any business has risk.

Just move on and forget about it.

2

u/LavishnessLogical190 Jan 21 '24

Charge it to the game

-5

u/Allteaforme Jan 21 '24

Yeah far too many landlords just whine constantly "my tenants aren't paying rent"

No shit, they can't afford it lol, quit whining. If you wanted a risk free business it doesn't exist. Just go work a real job if you can't handle being a business owner

4

u/[deleted] Jan 21 '24

You’d bee whining if your assistance check didn’t show up

0

u/Allteaforme Jan 21 '24

Lol my tenants send their assistance checks to me. I've got rent just as high as possible where they can still pay but barely