Shawnee County Landlords
Association, Inc.

ANOTHER INSTALLATION IN THE MOSTLY RECYCLED SERIES.... SELLING TENANT'S PERSONAL PROPERTY

Continuing our discussion of KSA 58-2565 and the process for disposing of tenant's belongings, we now turn to what to do with the proceeds (if any) of a sale of tenant's belongings. Please remember that you must follow the exact statutory procedure for selling your tenant's belongings (covered last month and consisting of storing, advertising and notifiying tenant, meeting specific statutory time requirements).

The statute provides that sales proceeds shall be applied in the following order:

1. To the reasonable expenses of taking, holding, preparing for sale or disposition, giving notice and selling or disposing thereof;" In a dispute, the court will determine what is "reasonable." Many landlords simply leave the tenant's belongings in the rental property for the required 30 days instead of moving it to storage. I'm not the judge, but that seems reasonable to me if the monthly rent is less than the cost of moving the items to a storage locker, paying for the locker and then moving them for sale. If landlord leaves the items in the rental unit, then the storage costs would be the monthly rent. Other reasonable expenses would include the cost of the required newspaper ad any paid help in carting the stuff out to the lawn for a yard sale or similar costs.
2. To the satisfaction of any amount due from the tenant to the landlord for rent or otherwise;" After you've applied sales proceeds to the storage/sale costs as discussed above, you next apply it to the amounts still owing to you for unpaid rent and damages etc. By this point, you should already have sent tenant a security deposit settlement sheet showing how you applied the security deposit. Apply sales proceeds to what's left. For example, tenant left owing you $900 in unpaid rent, and the damages they caused cost you $400. That's a total of $1300 they owed you when they left. You applied their $300 deposit on the security deposit settlement sheet. That then leaves $1000 tenant still owes you. If you sell the tenant's belongings for $600 and have subtracted the $350 costs to store and sell, you have a net $250 sales proceeds to apply to the $1000 tenant still owes you. I'd be sure to keep these records in case tenant sues you for wrongfully disposing of their belongings. Keep in mind a suit based on a written contract (a lease is a written contract) can be brought up to 5 years from the breach of contract. Your memory will likely be long gone by then, so correct and detailed records are imperative.
3. The balance, if any, may be retained by the landlord, without liability to the tenant or to any other person, other than a secured creditor who gave notice of creditors interest as provided in subsection (d), for any profit made as a result of a sale or other disposition of such property." So if tenant leaves enough good property, landlord can actually apply sales proceeds to costs of storage/sale, pay off the tenant's entire debt to landlord, including unpaid rent and damages and then keep whatever's left. For most tenancies, that provision is pie in the sky since the tenant's belongings are unlikely to be worth enough to produce sufficient sales proceeds. But the legislature's sentiment is nice. An important part of that provision is the notice from any secured creditor. That situation is most likely to occur when some of tenant's furniture you're storing is owned by a rent-to-own company. If you are notified or know that some of tenant's property is owned by such a company, seek specific legal advice before selling it.

The law finally goes on to say that any buyer at your sale of tenant's property takes the purchase free and clear of anyone's rights unless the buyer knows that the sale is in violation of ownership rights or secured interest of a third party (like a rent-to-own company).

--Larry Tenopir

NOTE: The opinions and analysis expressed in this column are those of the author, are general in nature and should not be considered to be legal advice specific to your individual situation.