Should You Collect a Security Deposit?

One possibly will believe you are doing business to the very next incarnation of Ghandi, however now and again even the greatest building manager gets tricked every so often, you will come upon a person that does not take charge of their dwelling to the degree that you would prefer.

Security deposits have been created to guard the building manager from having to take on costs that they should not when a untidy occupant vacates and leaves the dwelling in a state of disorder.

Receiving a security deposit guarantees that after the tenant has moved out, they have left the property in a satisfactorily tidy and habitable state, exactly as they had when they signed the lease. If they have not done so, the deposit may be set aside to bring the property back into habitable state for any fixes that are going to have to be to be completed exceeding customary wear and tear.

Yet what might normal wear and tear demonstrate? It definitely sounds subjective to me.

One must always Investigate with the HUD office for your city to make positive you are following the law, but, there are conditions that are unmistakably defining of occupant mistreatment.

If you have not painted in 10 years and you have paint peeling off the walls that would be deemed common wear and tear. But, if you have paint falling off off the walls due to the fact that they have kids that they lift up and consent to them peel it for a good time, that is clearly not.

Getting back to the legalities of the city - nearly each city has laws that pertain to the quantity of security money a building manager can collect and that building manager can make use of to mend the damaged apartment. Regardless of whether or not you are doing business in a city that has laws that pertain to deposits, it is always a good idea to do a Move-In inspection including pictures depicting the state of the dwelling when they moved in. Nowadays, you must have a digital camcorder for this kind of purposes. You ought to furthermore do a Move-Out inspection, once more with pictures, so you both can unmistakably compare the two.

It is at all times a respectable thought to detail the harm done for the reason that you will find out the hard way that most judges are very occupant friendly - which means they more often than not side with the occupant in a word for word situation. Yet if you are able to reinforce your assertion with proof, odds are grand that you will come out on top. However, it is the liability of the occupant to notify the building manager when a restoration is considered necessary or if destruction has happened.

All cities appoint a clear duration of time that a building manager has to return the unused portion of the security deposit.

The most frequent slip made by a building manager is thinking that the security deposit is theirs after move-in.

Please note: The security deposit is the occupant's money! It is not your cash!

It is forever a good idea to set up a separate bank account for your apartment so that you can create accounts for your occupant deposits while retaining ownership of the savings account as an escrow agent. And should your city make it a requirement for you to pay the occupant interest, that can all be taken care of by the bank if set up properly. Ask for assistance if you have never done this before your bank will be pleased to hold your money!

Be aware that some cities will let you collect for the last month rent in addition to the security deposit, so be sure to check the legalities! If you can, that last month rent can be co-mingled in your checking account with your other cash and used for costs as they come up. Make sure you put in the rental lease agreement that this is the case so you do not go knocking on their door to pay you when they have given their notice!

Bonus note: If the renter leaves without paying their last month rent, you are allowed to subtract it from the security deposit as well as any late fees, penalties or damages legally due you.

So, make sure you are clear on the laws in your state as the do vary.

In conclusion:

Rent collected is your money and you can do with it as you see fit. Security deposit collected is the money belonging to the tenant and may not be co-mingled with your money.

Each state determines the amount of security deposit that is collectible and when that money must be paid back to the renter.

Security deposits are for indemnity above normal wear and tear. Know how the courts in your area describe normal wear and tear!

Good luck and happy landlording!

Although the security deposit is there to protect you from renter abuse, if you abuse it by not returning it, or by not returning it on time, there are consequences. The renter can sue you for the money.

Stirling Gardner consults for EZ Landlord Forms - your best online resource for a state specific rental lease agreement and rental agreement forms.

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