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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. read more…