Property Law

Arkansas Security Deposit Law

If you are a landlord in Arkansas, you may be required to follow certain procedures when handling the security deposits of your tenants. First, you may not require a security deposit totaling more than two (2) months rent. That means if you charge $500 in rent each month, you may not require more than $1,000 as a security deposit. After the tenancy ends and the tenant has moved out, you must return any property or money, including the security deposit, to the tenant within 60 days.

If you wish to use the security deposit to cover the expenses of any damages the tenant has caused, or if any rent remains unpaid, the law requires you provide notice to the tenant before keeping the security deposit to cover those expenses. You must account for all of the security deposit you keep by making a written list detailing all of the repairs and damages that the tenant caused. Any amount of the security deposit that is not a documented expense must be returned to the tenant.

You must send the notice and payment to the last known address of the tenant. If the letter containing the notice and payment is returned, you still must make a reasonable effort to find the tenant, such as by phone or email. Once you mail the letter, however, and 180 days have passed without any sort of response, you may keep the payment only if you are still unable to locate the tenant.

Failing to provide the tenant with his notice and security deposit will subject you to penalties. If you fail to provide the tenant with a list of expenses the security deposit will be applied against, or fail to return the security deposit, the tenant may receive double the amount of the security deposit in addition to any other property or money belonging to the tenant and other costs the tenant incurred while waiting for the notice required by Arkansas law. This means that if the tenant paid $1,000 for a security deposit, she could receive $2,000 if you fail to comply with the law. Additionally, if the tenant has incurred any fees, penalties, or other costs while waiting for the return of the security deposit, you may be liable for those as well. If you are unable to return the list of expenses or the security deposit within the 60 days because of a dispute between you and the tenant regarding the amount the tenant may receive from the security deposit, you won’t be required to return double the amount of security deposit – but will be required to return the portion that did not go the expenses incurred as a result of the tenant.

Certain landlords are exempt from these requirements, but only those who, as individuals, own five or fewer rental properties and who do not use other individuals or corporations to manage the property in some way. For those who are covered – remember that a little bit of documentation will go a long way and protect you from losing out on the expenses in maintaining your rental properties.

 

Property Law Update:  Sale of Property in Divorce

In a recent Arkansas Court of Appeals decision, the Court confirmed that during a court ordered sale of the marital home during divorce, there is no requirement for a “minimum bid”.  Harper v. Cannon, 2009 Ark. App. 785.  In this case the parties had divorced, and the marital property was auctioned at sale.  A final bid of $48,000.00 was accepted, and both the husband and wife objected to the sales price as “grossly inadequate”.  Upon appeal, the Court ruled that mere inadequacy of price, unless so great as to “shock the conscience” of the trial court, is insufficient to overturn a sale.

In Probate cases, applicable law holds that a sale price be at least 75% of the property value.  The Court of Appeals refused to apply this calculation to divorce cases, however, and referenced previous decisions by the Arkansas Supreme Court that “no formula exists” for determining an allowable sales price in this context.

Recent Decision Concerning Probate Interest in Real Property

In Butler v. Butler, 2009 Ark. 660, the Arkansas Court of Appeals addressed the claim of a son attempting to gain a 1/5th interest in his father’s property 20 years after his father’s death.  Horace Butler died in 1986, holding a 1/5th interest in real property.  The remaining 4/5th interests were held by Horace Butler’s siblings, each of whom was also deceased.  Grant Butler filed a Petition to Quiet Title, alleging that as Horace’s heir, he was entitled to a 1/5th interest in the land.  The children of Horace Butler’s siblings objected, claiming that Horace had no known children.

To prove his claim, Grant Butler submitted testimony of a 91-year old man who stated that Horarce had told him that Grant was his son.  Grant also submitted copies of his birth certificate and documentation showing that his name had been changed to “Grant Butler”.  The trial court ruled that the documentation provided was sufficient, and the Court of Appeals confirmed.

Adverse Possession Update

Pursuant to a recent Arkansas Court of Appeals ruling, cases involving adverse possession against family members require stronger evidence then cases involving non-family members.  In Nix v. Owen, 2009 Ark. App. 756, a decision reported on November 11, 2009, the Court clarified that the use of land by family members is presumed to be permissive, unless proved otherwise.

Generally, in Arkansas, the following factors are necessary to prove a claim for adverse possession:

  • Actual or constructive possession of the real property for at least 7 years which is visible, notorious, continuous, hostile, exclusive, and accompanied with an intent to hold against the true owner.