I agree that inserting insurance companies into the mess is probably a bad idea.
My personal preference would be for:
1. smaller "normal" deposits. Half of a month's rent instead of a full month?
2. laws that provide the ability of tenants to seek punitive damages equal to the amount of the deposit if the landlord is found by the courts to have withheld it unlawfully, as well as fines by the city for landlords found guilty of this multiple times. Some jurisdications may already have this, for all I know.
I think the smaller deposit amount would still encourage every day Joe to repair damage that occurs in hopes of getting his money back, which protects the landlord. But, the smaller deposit also helps people afford to move in.
Honestly, my experience with landlords unlawfully withholding deposits has been so bad that I would be okay with landlords not being allowed to ask for damage deposits at all. Instead, landlords would have to seek remedy for real damages through the courts. While that sucks for the landlords, it already happens for major damage in amounts that exceed the deposit amount. Basically, it prevents landlords from nickle and diming tenants and puts the costs of more minor maintenance between tenants back upon the person who owns the property.
+1. I would love to see real recourse for tenants introduced. My personal experience includes so much unlawful withholding (that you can't really do anything about) to the point where I consider unlawful loss of a security deposit to be another cost of moving.
I'd rather pay a deposit and lower rent, but that only works when you actually get the deposit back for leaving behind a relatively clean apartment minus normal wear and tear.
I couldn't agree more. I ended up losing about $700 to pay for a 1/8" size ding on the lower edge of a SS fridge door, that was likely not worth much more, especially since it was 4 years old. Specialty order of panel from factory that they didn't make any more, and a professional technician to come out to install it. Did it actually get done? Who know, they said they had to get someone in to do an estimate before they could even tell me what it would cost, and 12 hours later I was driving 5,000km away, so I figured it was a money grab - especially since every time they came by they lamented to me the purchase of it. I don't wish badness on people, but in that sort of financial play, a part of me smiles when I get confirmation I made a smart financial move.
That's completely fucked. It's basically requiring landlords to self-insure (to a greater extent) against the shitfulness of their tenants, since in so many cases it will be impossible or impractical to recover damages from a tenant who's already left teh property and, most likely, the jurisdiction. In my state the equation is already incredibly skewed towards tenants - they are allowed to break a fixed term lease (for no reason); landlords cannot; the residential tenancies tribunal is very pro-tenant and will rarely evict; etc etc
What's to protect against the shitfullness of landlords who are borderline thieves, and what is the tenant's recourse after they've already left the jurisdiction when the LL wants to play games?
I always found it funny that there seems to be such a presumption that the LL is so much smart and financially responsible than tenants, and societal rules have reflected that. I would say that
average landlord is probably better off than the
average tenant, but I'd also wager that both groups tail off into the top and bottom 1%s.
It's one of the few instances I can think of (aside from say a bond to get out of jail, or a retainer to retain a lawyer) where you not only have to pay the entire thing up front (contrasted with say a meal, or most business relations that are on net 30 terms, with cash on delivery being almost a slap in the face, but here it's cash upfront,
before delivery, along generally with another month for the last one in case you're so shifty you have to be evicted, and another sum to make sure you don't damage the place.
The restaurant equivalent would be like having to pay $1000 cash up front (just in case you order everything), then once your bill was settled they'd send you a refund.
Honestly I kind of side with the no damage deposit thing. I mean how often are places legitimately damaged vs just elaborate claims of what is actually wear and tear? And then going one step more saying that "that quarter size ink blotch in the closet means that the entire carpet is now worthless and you owe me what it would cost to redo the entire unit since it has to match", Most hotels do a couple hundred pre-auth for calls and food, not $10k on the possibility of you setting fire somewhere in the room.
On the other hand, the potential for a LL to get screwed is there, and unfortunately they type of person to damage a place, is likely also the type to run and hide. At the same time, I feel the whole DD thing is a greatly abused back door way to pad rents, especially in places where LLs are cash flow negative...