As a landlord, there's nothing more exciting than finding a worthy tenant to move into one of your vacant properties. But, one thing that might often be overlooked when it comes to new tenants is the security deposits you must require before allowing them to move in.
You want to require a security deposit because the tenant moves out and they leave extensive damages or unpaid rent that you need to cover. Learn more about what you need to put in your lease agreement regarding security deposits.
Security Deposit Limitations
When you collect a security deposit from your tenants, remember that there is a limitation on what you're allowed to use it on.
Understanding these limitations could keep you from facing legal troubles if you misuse the funds the tenant has given you.
The things that a tenant security deposit can be used on include:
- The tenant has broken their lease agreement
- The tenant left behind damaged property
- Unpaid bills
- Rent that hasn't been paid
- Cleaning cost
If you're keeping the tenant's security deposit after they've moved out for any of the reasons above, you need to ensure you've kept accurate documentation.
This is in case you have to go to court and prove what the deposit was spent on rightfully so.
Abide By A Time Frame to Return the Deposit
After a tenant has moved out, you must ensure you conduct your walkthrough and return it if it's being returned within a specific timeframe. If you're going to make deductions to the security deposit, you need to provide an itemized list to justify the deductions you're making to the tenant and keep a list for your records.
Ensure that if you deduct funds from the security deposit total, you've got to justify it. Which would mean you need to reference the list I've provided above.
Secure the Deposit Upfront
Again, having a tenant move into your property might seem significant. This can cause you to overlook several steps that will protect you as a landlord, but you must ensure you collect security deposits upfront.
This must happen before tenants can move into the property and begin living there. While you're at it, you need to insert the amount and its stipulations in the lease agreement before you collect the security deposit.
This will represent that you provided the information to the tenant, and they agreed to pay it.
A Security Deposit Doesn't Cover Last Month's Rent
People sometimes assume that the security deposit is last month's rent, but that's not the case. The only time a security deposit is last month's rent is if this is in the lease agreement itself.
This means that the security deposit is for nothing else except the rent. If you decide to take this route, you must understand that you're responsible for covering any damages to your property once the tenants move out.
Security Deposits & Things To Know
When it comes to the security deposits paid by your tenant, there are several things you need to know. Ensure you don't mistake it for last month's rent, and always put the amount and other necessary information in the leasing agreement.
Contact PMI Wiregrass for more information and valuable resources to make you the best landlord you can be.
