subject: Always Collect A Security Deposit If You Are A Landlord [print this page] A person may perhaps believe you are doing business to the very next incarnation of the Pope, yet at times even the finest property manager gets tricked every once and again, you will meet a party that does not take charge of their residence to the degree that you would appreciate.
Security deposits have been written to shield the property manager from having to take on costs that they should not when a unclean applicant vacates and leaves the residence in a state of chaos.
Receiving a security deposit secures that as soon as the occupant has moved on, they have left the dwelling in a satisfactorily tidy and habitable state, specifically as they had when they signed the lease. If they have not done so, the deposit may be employed to bring the dwelling back into habitable state for any fixes that have to be finished beyond typical wear and tear.
However what might normal wear and tear neccessairly mean? It definitely sounds subjective to me.
A person ought to always confirm with the HUD office for your principality to make definite you are following the law, but, there are circumstances that are plainly defining of applicant mistreatment.
If you have not painted in 10 years and you have paint peeling off the walls that would be classified customary wear and tear. But, if you have paint falling off off the walls for the reason that they have kids that they lift up and allow them peel it for merrymaking, that is clearly not.
Getting back to the legalities of the principality - nearly each principality has laws with regards to the quantity of security funds a property manager can collect and that property manager can make use of to put back together the damanged house. Regardless of whether or not you are leasing in a principality that has laws with regards to deposits, it is always no-brainer to do a Move-In inspection documenting with pictures demonstrating the state of the property when they moved in. Today, you need to have a digital camcorder for these kinds of purposes. You need to moreover do a Move-Out inspection, once more with pictures, so you both can plainly compare the two.
It is at all times a first-rate plan to write down the destruction to the unit done due to the fact that you will realize the hard way that most judges are very applicant friendly which means they typically side with the applicant in a word for word situation. However if you could reinforce your assertion with proof, odds are elevated that you will come out victorious. Alternatively, it is the liability of the applicant to tell the property manager when a patch-up is required or if destruction to the unit has happened.
All principalities appoint a specific quantity of time that a property manager has to return the unused portion of the security deposit.
The most universal faux pas made by a property manager is thinking that the security deposit is theirs after move-in.
Please note: The security deposit is the renter's money! It is not your cash!
It is at all times a good idea to set up a separate bank account for your dwelling so that you can create accounts for your applicant deposits while retaining ownership of the checking account as an escrow agent. And should your state make it a requirement for you to pay the applicant 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 ecstatic to hold your money!
Be aware that some principalities 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 funds 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 occupant leaves without paying their last month rent, you are allowed to withhold 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 collectable and when that money must be paid back to the occupant.
Security desposits are for detioration 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 occupant abuse, if you abuse it by not returning it, or by not returning it on time, there are consequences. The occupant can sue you for the money.
