Security Deposits & Carpet Cleaning Fees
Here’s a recent question from a property manager-

QUESTION-    We followed the 45-Day Letter Rules and deducted a $200 carpet cleaning and repainting fee that the lease clearly describes.  Yet, the tenant claims we owe her the entire security deposit back and that Indiana law does not allow us to keep from the security deposit anything other than damages, unpaid utilities and unpaid rent.  Is this tenant right?

MATT’S ANSWER-    No, the tenant is wrong for several reasons.  Your lease specifically states that you can withhold that $200 fee from the security deposit.  Secondly, the $200 fee is a form of damages called “liquidated damages.”  In essence, you and the tenant agreed to “liquidate” certain repairs costs – carpet and paint – at the set amount of $200.  Clearly, damages amounts can be withheld from the security deposit.

Additionally, the Indiana Court of Appeals and Supreme Court have held in prior landlord-tenant cases that a tenant is not owed a 45-Day Letter Notice for unpaid rent, because the tenant already knows that the tenant owes rent.  The purpose of the 45 Day Letter Rule is to give the tenant notice of what amounts and why the tenant is not getting all her security deposit back.  There is no point in sending a tenant notice to apprise her of her obligation to pay rent, as the tenant already knew about that obligation – it’s in the lease she signed.  So, the Courts have ruled against tenants in security deposit lawsuits where the deposit refund has been reduced by the amount of unpaid rent.  Here, the $200 fee is no different than the unpaid rent – in both matters, the tenant knew in advance that the tenant owed that amount to the landlord.  Accordingly, no notice in the form of a 45 Day Letter would be required.

Read more about Indiana’s Security Deposit Laws.


Can I Collect Rent and Charge a Late Fee?

rent sign

Here’s a recent question from one of the members of INreia– the Indiana Real Estate Investor Association, which meets monthly- SECOND TUESDAY- in downtown Indianapolis.


Hi Matt,

QUESTION-    I am a friend of Amy Siewe’s and I have attended a couple of the INREIA meetings as well.  I was wondering if you could answer a quick question for me regarding collecting late rents from tenants.  I have a tenant who is late on rent and owes a $75 late fee.  If I accept the rent without the late fee, will I legally be unable to pursue the $75 late fee in Indiana?

ANSWER-    No, you can collect the rent and add the late fee to the unpaid balance owed.  Just communicate that intent to the tenant, and don’t accept any “paid in full” check.  Eventually, take the late fee out of the security deposit.

All Employees Are in Sales- Part II



In Part I of this blog topic, I discussed how employees impact a customer’s buying experience.  In this blog entry, I’ll explain how that is the essence of your sales efforts.


This will be short, because the concept is so simple.


Your employees can sell your products or services by showing that they value customers.  Period.  End of concept.  End of post.  (almost)


‘Value our customers?”


What’s that mean?


I mean that they should really, truly value your customers.  There should be genuine concern by your entire staff to help, serve and improve a client’s status or position.  Genuine effort is required, but genuine concern is equally important.  Most customers can detect when a clerk or salesperson is faking it.  That is a huge barrier to getting repeat business, which should be the goal of every business in some form.  It’s too hard winning all new customers every day.  It’s easier to sell a customer whose already accepted your product or service.  So, do everything it takes to get the customer to return.


The first and most important element in that effort rests with your staff.  They are your company.  That one rude (or exceptional) employee, as much as anything, will be remembered by your customer the next time she is going to buy your or your competitor’s product or service.  So, hire, fire and invest in people properly.  Don’t “train” your staff.  We train dogs, seals and show horses.  “Empower” your staff with skills, knowledge and rewarding work environments.  “Develop” your human resources.


Get  this. . .  in many European countries, the success of a company is measured largely by employee retention and job satisfaction.  We treat employees quite differently here in the USA, and it shows in the lack of employer-employee loyalty.  Who pays the price for that distrust and lack of loyalty?  The customer, that’s who.


Align your company’s vision and goals with those of your staff, and you’ll be on the path to making customers happy.  My guess is that most of your staff has no clue what your company is trying to become, accomplish or excel at.  So, it is no wonder that those values aren’t translated into quality customer relations.


Do you get it?  If you don’t, your business is almost assuredly underperforming.

How Do I Resolve A Dispute?

hand shake


The best way to resolve a dispute is to AVOID disputes in the first place!  Seriously.  Think about it.


Lawyers spend as much or more time resolving disputes than they do preventing them.  The cynic in me thinks that lawyers prefer lawsuits, because lawsuits are time consuming and generate more fees for lawyers.  When a client gets sued, the client has few options- settle on unfavorable terms, bankruptcy or fight the lawsuit.  There are costs associated with each of these three options.


There is a better way. . . well drafted and implemented contracts and legal forms.


Sadly, many clients do not want to pay a lawyer for the time it actually takes to create a good contract.  Yet, a good contract is like insurance, in that sense that you can pass on liabilities and risks to another person through contracts.  Actually, insurance is a contract between you and the insurer.  A good B2B or B2C contract transfers risks from your business to another business or your customer, much like insurance.


Best of all, contracts set expectations.  Everyone signing a good contract knows what the result of a lawsuit will likely be, resulting in fewer reasons to file lawsuits.  Think about this- Why would you defend a lawsuit, if you knew you were going to lose in court?  If your contract tells you that you’re going to lose, then settle and write a better contract next time.


The difficult lawsuits are those where (1) there is a bad contract in place or (2) the facts are uncertain.  Those are the cases that should go to court.


However, before you run to the courthouse, consider four other ways to resolve a dispute:

1.  Try it again.     Reformulate the relationship by drafting a new contract to replace the one you signed.  Presumably, you and your “opponent” wanted to do business together when you signed the first contract.  If the contract form you signed was poorly written, consider efforts to save the relationship and sign the contract you wanted from the beginning.  If all trust is lost, then this option won’t work.

2.  Try talking.   Try settlement negotiations with or without your lawyers present.  It is amazing how easy it is to resolve disputes over a cup or coffee or a beer.  Try it.

3.  Mediation.  This is a process available before or after a lawsuit is filed.  A mediator is hired to assist you in negotiating a settlement.  The process depends on the willingness of the parties to settle.  Note that the rules governing mediation differ depending on whether mediation is done before or after a lawsuit is filed.

4.  Arbitration.  Essentially, you hire a private judge.  The advantage of arbitration is that it is faster and cheaper than going to court.


In a future blog, I’ll talk about these four options in more detail.  There is an article on arbitration clauses in contracts on my law firm’s website-

Is your insurance agent reassuring?

How do you know if your insurance agent sold you the right insurance coverage?

You’ll never know for sure, unless you suffer a casualty, loss or judgment.  Or, you can follow the instructions in this blog!

I am a huge proponent of getting insurance to cover your personal and business risks.  But, the key to insurance is getting the right type and the right amount of coverage.

Let me illustrate these lessons with the story of two of my clients:  Fred and Bill.

THE STORY OF FRED –  BUYING THE WRONG COVERAGE.  Fred ran his business out of a spare bedroom in his house.  Twice each week, Fred had a few contractors come to his home for business meetings.  One winter day, Fred’s favorite contractor (Stanley) walked up Fred’s driveway, slipped on some ice and broke several bones.  Stanley had no disability or health insurance, and was out of work for weeks.  Stanley, being self-employed and thus unemployed, turned to Fred:  “Hey Fred, I got hurt because you didn’t clear your driveway of ice.  Can you pay me my lost income, while I heal?”  Fred calls his insurance agent and makes a claim.

BUT THERE’S NO COVERAGE FOR FRED!  Fred’s homeowner’s insurance doesn’t cover business risks.  Stanley is a business invitee.  There’s no coverage for a business invitee who gets hurt doing business at Fred’s home.

THE STORY OF  BILL- BUYING TOO LITTLE COVERAGE.  Bill owns a business- a restaurant.  One day, there is a grease fire in the restaurant and Bill loses $225,000 of equipment and tools (stoves, ovens, utencils, pots, pans, etc.) and $150,000 of leashold improvements (plumbing, carpet, walls, restrooms, etc.).  Bill calls his agent and makes an insurance claim.

Then Bill gets the bad news-   Bill has $200,000 of coverage on equipment.  He’s short  $25,000 of coverage.  But the insurance agent has some good news. . .  there’s $300,000 of coverage on the improvements.




Bill was UNDER-insured on equipment and OVER-insured on improvements.  What a waste.

Could Fred and Bill have done something differently?  Was this the agents’ fault?  Do these situations happen often?

Yes.  Maybe.  And yes.

There are solutions.  There is a better way to communicate with your insurance agent in developing a great business insurance plan.  Stay tuned to this blog.  I’ll cover these topics in future blogs.  For now, you should recognize the importance of buying the right TYPE and AMOUNT of coverage.