Belshaw SCRA Case: Deposits Kept From a Couple Who Never Moved In

What happened

On April 10, 2018 the United States sued Daniel Belshaw, owner of a townhouse in Santa Maria, California, in the Central District of California's Western Division, and both sides signed a settlement agreement dated April 11, 2018 (complaint paragraph 7; agreement signature page). The agreement describes him as representing himself, in pro per (agreement paragraph 1). According to DOJ's case page, the U.S. Attorney's Office primarily handled the case.

The tenant was commissioned in the Air Force in the fall of 2015 and attended Officer Training School at Maxwell Air Force Base in Alabama from on or about October 4 to on or about December 15, 2015. In November 2015 PCS orders directed him to report to Vandenberg Air Force Base by December 18, and on or about November 16 he and his wife signed a six-month lease on the townhouse, running December 1, 2015 to May 31, 2016. Before move-in he paid $1,950 for the first month's rent, a $1,950 holding deposit used as the security deposit, a $95 key deposit and a $1,500 refundable pet deposit, $500 for each of three dogs. Section 4.B of the lease called it a "Military Clause lease" but required 60 days' notice to vacate from either side (complaint paragraphs 8 to 14).

On December 16, 2015, the day after he graduated, the Air Force amended his orders to send him to Joint Base San Antonio-Randolph, Texas, by December 18. That same day the couple told Belshaw by phone and e-mail, gave him the amended order and said they had to cancel. The lieutenant conceded he would forfeit $3,900, December's and January's rent, for a house they would never occupy, but asked for the refundable pet deposit because they had never moved in or even received keys. Belshaw replied that the 60-day notification period "is enforced even on Military Tenants also," and told the lieutenant's wife in a second e-mail that the SCRA got them out of the lease but not out of the notice obligation, whose cost he said exceeded the pet deposit. The complaint says he kept the $1,595 in pet and key deposits, retaining $5,495 in all from a couple who never moved in (complaint paragraphs 15 to 21).

An Air Force legal assistance attorney asked him for the deposits in May 2016. After the Justice Department opened its investigation on October 12, 2016, Belshaw gave a partial response on May 20, 2017, claiming the lieutenant had no SCRA protection because he had not asked for it to be written into the lease. On July 25, 2017 he produced the "Military Clause" he generally used for a military tenant on request, under which the tenant agreed to pay $870.00, described as one-half month's rent, for early termination (paragraphs 20 and 22 to 24).

The law behind this: 50 U.S.C. § 3955

Termination of residential or motor vehicle leases: read the statute , or read § 3955 in plain English, with its enforcement record .

Who was covered

The lieutenant and his wife, the former tenants the agreement names. The check was to name both of them, and government counsel was to hold it until both releases were signed (agreement paragraphs 3, 11 and 12). Section 3955(b)(1) reaches a lease of premises "occupied, or intended to be occupied" by a servicemember or dependents, which is how a couple who never moved in could be covered. Only Section 3955 claims connected to the complaint were released (paragraph 32).

What the settlement paid

• $2,595 to the lieutenant and his wife within 15 days of the effective date: the $1,595 in pet and key deposits returned plus $1,000 in additional damages, by certified check through counsel for the United States, to be held until both releases were signed (agreement paragraphs 11 and 12). DOJ's case page describes the $2,595 as damages to the servicemember.
• A $1,595 civil penalty, also due within 15 days, payable by electronic funds transfer under § 4041(b)(3)(A) (paragraph 13).
• A standard termination paragraph for leases signed after the agreement, which states that the landlord will keep no security, pet, key or other deposit as a penalty for early termination, and policies refunding all refundable deposits and advance rent within 30 days after the termination takes effect, with no other military termination wording permitted (paragraphs 9 and 10).
• Compliance reports within 90 days and each year, listing his rental properties, whether any tenant is a servicemember and any servicemember's termination request, and a written report of any SCRA complaint within 15 days of receiving it. The agreement ran three years from execution and has ended (paragraphs 15, 16 and 29).

Why this case matters

Calling a lease a military clause lease does not make it one. As the complaint quotes him, Belshaw accepted that the SCRA let the couple out and then demanded 60 days' notice anyway. Section 3955(d)(1) sets the effective date of a monthly-rent lease termination 30 days after the next rent payment falls due once notice is delivered, and § 3955(e)(1) rules out early termination charges, so the complaint treats his keeping the deposits to cover the notice period, and his standard clause charging half a month's rent, as early termination charges (complaint paragraphs 28 and 29). The other point is timing: coverage does not wait for move-in, because the section covers premises intended to be occupied.