Crowe SCRA Settlement: A Lease That Forfeited the Deposit on Orders

What happened

The United States sued Michele Crowe, who owned and managed a single-family house in Montgomery, Alabama, in the Middle District of Alabama on June 13, 2017 (complaint paragraphs 6 and 7). Counsel for the United States signed a settlement agreement on June 15, and Crowe signed it on June 16, 2017, the date it took effect under its own terms (agreement paragraph 30 and signature page). DOJ's case page says the Chief of Community Legal Services, Legal Issues Division, United States Air Force referred the matter to the Department.

An Air Force Major and his wife leased the house on July 2, 2015, through June 30, 2016, at $1,450 a month. He had moved to Montgomery for the Air Command and Staff College at Maxwell-Gunter Air Force Base, which the complaint says runs from late July to early June. He was required to pay a $1,450 security deposit and a $600 pet deposit for two dogs, half of it refundable if the dogs did no damage. Paragraph 15 of the lease let the tenant end it early on military orders to relocate more than fifty miles from the greater Montgomery area, on 30 calendar days' written notice, and said the security deposit "shall be forfeited in the event of a transfer resulting in such early termination of this agreement" (complaint paragraphs 8 to 10).

On or about April 11, 2016 he received PCS orders to report to the Pentagon no later than July 31, 2016. On April 27 he mailed his notice and orders, return receipt requested, saying the family would be out by May 31, which the complaint calls 30 days after the May 1 rent date, and asked for the $1,450 deposit; Crowe confirmed receipt by e-mail the next day. The family left on May 31 with the rent current. On July 1, 2016 Crowe e-mailed that she was keeping the security deposit under paragraph 15 and the whole pet deposit for claimed pet damage, and that he owed her $3,339.03 for damage to the property (paragraph 17 gives it as $3,339.02) plus $90 for an extra day's rent. That claim included $2,000 to replace "dead" trees, and the complaint says most of it could not properly be charged to him. His military legal assistance attorney sent her his accounting on August 4, 2016, disputing all but $250, and got no answer (complaint paragraphs 11 to 18).

The Justice Department told Crowe on August 25, 2016 that it was investigating. Her September 27 response appeared to credit the security deposit and drop the $90, yet still claimed over $1,500 beyond both deposits, and a November 10, 2016 letter to the Department threatened a lawsuit unless he sent $1,564.29 (paragraphs 19 and 20). By the time of the agreement she had a lawsuit pending in the Small Claims Court of Montgomery County, Alabama, seeking $1,839.03 in alleged damages on top of her retention of $1,750 in security and pet deposits (agreement paragraph 14). The agreement recites that she cooperated fully with the investigation (paragraph 5).

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 Major and his wife, whom the agreement identifies as Crowe's former tenants. The check was to be payable to both of them, and neither was to receive it until both had signed releases (agreement paragraphs 3, 12 and 13). The agreement did not release any claim other than one for violating Section 3955 (paragraph 34). Its forward-looking terms protected any servicemember renting from Crowe, her agents or her successors for three years from execution, a term that has ended (paragraphs 9, 10, 20 and 31).

What the settlement paid

• $1,425 to the Major and his wife within 15 days, made up of $475 of their security deposit returned and $950 in additional damages, sent as a certified check to counsel for the United States and released to them only once both signed (agreement paragraphs 12 and 13). DOJ's case page lists the $1,425 as going to the servicemember.
• Crowe agreed not to collect any of her claimed property damage from the couple, by deduction from the check or any other way, and to dismiss her small claims suit with prejudice (paragraph 14).
• A $475 civil penalty under § 4041(b)(3)(A), payable within 15 days by electronic transfer (paragraph 15). DOJ's case page puts the total at $1,900.
• In every lease signed after the effective date, a set paragraph letting the tenant terminate on entering service or on PCS or deployment orders of at least 90 days, by notice handed over in person or sent by private carrier, mail, e-mail or text message, taking effect 30 days after the first rent payment date following the notice, with no deposit retained as a penalty and no other early termination charge. No other military termination wording was allowed, and changes needed 20 days' notice to the United States without objection (paragraph 11). Compliance reports within 90 days and on each anniversary, with copies of new leases and of any servicemember's termination request, and notice of any SCRA complaint within 15 days (paragraphs 17 and 18).

Why this case matters

The lease did the damage before anyone was transferred. A clause that makes a servicemember forfeit the security deposit when orders end the lease early is, in the complaint's words, a facial violation of the SCRA, because § 3955(e)(1) prohibits early termination charges, though the tenant still owes lease obligations due and unpaid at termination, such as reasonable charges for excess wear (complaint paragraphs 21 and 22). The fifty-mile condition in the same clause has no counterpart in § 3955. The complaint also explains why disputes like this recur near Maxwell-Gunter: Air Command and Staff College and other programs there last less than twelve months, students frequently get PCS orders when they finish, and lease fights with local landlords arise with some frequency (paragraph 25). Anyone signing a lease around a course shorter than the lease should check its military clause against § 3955 first.