How to Handle Security Deposits
- A Security Deposit is NOT your money. It should be held in a separate account and you should not touch a deposit until a tenant has given the property back to you.
- A security deposit can be used to cover the cost of damage to a property BEYOND NORMAL WEAR AND TEAR once they move out. You’re required to give a full final accounting for the deposit funds within 30-days of taking possession of the property.
- Normal wear and tear is very broad. Our attorney told us to ask the following question to determine if something is normal wear and tear. Would this have occurred with any other ordinary tenant? If yes, then it’s considered normal wear and tear.
- Be sure to send the final accounting via email and certified mail to have a record that it was mailed according to the law.
- It’s a good idea to take before and after pics and video of your property. We do this for all of the clients that we manage for. We take a video and pictures before a tenant moves in and also after. This is so that the record clearly shows how a tenant received the property and how they left it.
- Create an expectation of how you want the tenant to leave the property. We send a move out checklist which is very detailed and shows them our expectations. We also offer to do a walkthrough with the tenant before they move out to give them tips on what they should do to get the most back of their deposit.
At the end of the day, if they leave the property in move-in ready condition and get their deposit back this makes your life SO much easier as you can now re-market the property and get another tenant in there as quickly as possible.