Landlord Security Deposits – Understanding Landlord Security Deposits
Landlord security deposits are often misunderstood and not handled properly. Many states have imposed deadlines requiring landlords to itemize any amounts withheld. In some states, any amounts retained in bad faith by the landlord can result in stiff penalties against the landlord. I will provide a few tips that can assist the landlord:
Landlord Security Deposit Tip #1
It is often a common practice by landlords to retain an entire security deposit when a tenant breaks a lease. Landlords often assume that this is acceptable because it is justified by the tenant’s actions. In many instances, this is illegal. The landlord is often required to make reasonable attempts to re-rent the property and remit any pro-rata amount back to the tenant.
Landlord Security Deposit Tip #2
Consider a partially deferred landlord security deposit. A partially deferred deposit just means that rather than collecting an entire security deposit upfront, you accept it in future monthly payments. Normally you might require the entire deposit to be paid in three to six equal monthly payments.
A partially deferred deposit may make sense when you have a credit worthy tenant that lacks the funds for a full security deposit. In addition, it often allows you to get a larger deposit in exchange for allowing a tenant the privilege of paying the deposit in installments. In some difficult rental environments, you may consider allowing a deferred deposit as a move-in incentive, which could attract additional applicants to your property.
Landlord Security Deposit Tip #3
Know your state landlord tenant laws. These laws are established to clarify the laws governing the rental of residential dwellings and the obligations and rights of both tenant and landlord. This includes, but is not limited to, landlord security deposits, maintenance requirements for both tenant and landlord, the regulation of rental amounts (if applicable), occupancy and access guidelines, and possession of the unit.
The laws can be complex, so make sure to develop a relationship with a real estate attorney that specializes in the rental industry and is knowledgeable on landlord tenant law in your respective state. Don’t wait until you have problems to develop a relationship with an attorney.
Landlord Security Deposit Tip #4
Understand some of the complexity of government laws that may address the following:
Being a landlord can be challenging. The landlord must realize that the tenant is their customer and proper knowledge of landlord tenant law is imperative. Understanding laws that govern landlord security deposits is a continual process. In the long run, knowledge is critical and will reflect highly upon you and your rental properties.
Paul Sunndin is a 20 year real estate veteran and author of the eBook titled “Landlord Secrets: How to Manage Your Properties for Maximum Profit and Minimum Headaches”. This eBook provides landlord information and valuable landlord tips for both new and experience landlords. Discover the secrets to landlord success that will enable you to put your rental properties on autopilot by clicking here.
