You might have heard of a little something called a security deposit. It is a sum of money paid for by a tenant before moving in. The amount for the security deposit depends on the local state laws in your area. Some states require an amount worth a month’s rent, while some ask for two months worth of rent. Some states do not have a maximum amount at all.
The purpose of the security deposit also differs, depending on the terms stated in the lease agreement. But commonly, the security deposit will cover any expenses if there is a need for repairs in the property. It can also cover unpaid rent after the tenant moves out. Any amount left after is given back to the tenant.
However, sometimes landlords make mistakes about security deposits. You might notice some, but you can help correct those mistakes. Here are the common errors landlords make:
Overpricing
As I’ve mentioned, the amount for the security deposit differs in every state. The landlords must follow the local state laws to avoid any legal problems. Some landlords tend to overcharge their tenants. This practice is a big no-no because there are specific laws. Although, some states do not specify the amount.
Even if a tenant is unaware of this limit, it would also be challenging for you as rental agents to find tenants because the large security deposit would discourage them from renting.
Liquid Assets
Security deposits are still the tenants’ money. Landlords should remember that they are just saving it for any unexpected damages and not money they can spend on other things. If the landlord uses the security deposit for concerns unrelated to the tenant’s rental, he might face a complaint, or worse: a lawsuit.
Failure to perform walk-throughs
Before a tenant moves in, the landlord must perform a walk-through on the property to check the current state based on a checklist. It is better if it is well-documented with photos. After the tenant moves out, the landlord performs another inspection using the same list to compare the condition. If he failed to do a walk-through, the assessment of the property will not be accurate.
Move-out inspections without witnesses
A landlord must perform the walk-through with the tenant before they move-in and after they move out. After the walk-through, both parties must sign a document agreeing to the results of the inspection. If a landlord assesses the property without any witness, he can make up claims about damages. Once this happens, the landlord will get to keep some of the security deposit, so it would be unfair for the tenant.
Unable to present evidence
Complete documentation is a great help for landlords. Any damage must have sufficient evidence, and this is where the importance of walk-throughs comes in. There is no problem if both the landlord and tenant agree on the noted damages.
No itemized invoice
Any repair done to the property must have proof. Often it is an itemized receipt. The tenants are entitled to see the evidence of payment because, after all, the landlord is spending their money. The tenants also have the right to hire people to do the repairs. They would have to get the landlord’s approval, but the landlord cannot force them to use someone’s service.
Failure to return the deposit within the deadline
The landlord returns the security deposit after the tenant moves out. The remaining amount is given back to them after verifying that there are no unpaid repairs or rent. Each state has a law about the number of days that a security deposit is returned. Some states require that a landlord must return the deposit within 21 days after the move-out. Some states require 14 days.
There are several other mistakes that landlords make regarding security deposits, but these are the common ones. You have to make sure that your landlords do not commit all of these because essential practices are there for a reason. They will get the hang of it eventually.
If you know a landlord who does these, make them realize their error before taking on a tenant. Once you post that property listing on Padleads, and you syndicate it to other websites, the process of filling in a vacancy will flow continuously. It is better to correct the mistake before it’s too late.