I’m sure many readers know I live in Iowa City. And I’m sure many people in Iowa City know landlords here run a swindle each August and September. OK, so landlords run at least a few swindles. But I’m talking about the Great Annual Security Deposit Theft.
It’s a source of much wailing and gnashing of teeth among tenants in this college town. Anger over it stood out as a key reason for our local chapter of Democratic Socialists of America to start a tenants union.
Business Models, College Towns, and Security Deposit Theft
For anyone not familiar with how the security deposit swindle works, it goes roughly like this: the landlord charges a new tenant an amount of money – let’s say $1,000 – to secure the apartment against damages. And then, at the end of the lease, the landlord keeps some – or all! – of the security deposit. They do it regardless of whether there were damages to the apartment.
Of course, by Iowa law this isn’t supposed to happen. Iowa law places security deposit money into a separate account landlords can’t mix with their other funds. The landlord can earn interest on the money. But they hold the money itself in a trust. Then, landlords have to show a record of damages in order to keep the deposit money.
And yet it happens anyway. It happens to the point that many people believe Iowa City landlords simply write it into their business model, assuming security deposit theft as part of their profit margin. And things operated much the same way in Bloomington, Indiana, the college town where I lived prior to moving to Iowa City.
So, I know it’s a college town thing. But does this happen in other cities that aren’t college towns? We do see some features unique to college towns – constant turnover of people being the most obvious one. Many students live here on 3-5 year cycles. But many non-students also cycle in and out. Does this feature make it more likely for landlords to behave badly? Perhaps they think people leaving town won’t call them on it?
