Property managers should always require a refundable security deposit in residential property management properties. This deposit should be kept in a separate account for trust or escrow funds and will be returned to the tenant in part or in full once the tenant has moved out. Security deposits are often the most hostile subject between property managers and tenants and property managers can take steps to prevent security deposit disputes, educate tenants and ensure that security deposits are used correctly and not abused. Taking these steps will also protect property managers against potential legal action.
1. Know the State Laws
Property managers should educate themselves and their tenants on the state laws regarding security deposits. These regulations can determine the security deposit amount, the handling of the security deposit, the timeframe in which a security deposit is to be returned as well how what constitutes as an allowable deduction.
2. Document, document, document
Before a tenant moves into the property, walk through it with them and thoroughly document any damages to the property by either recording or taking adequate pictures. Do the same upon the tenant terminating their contract. Documenting the condition of the property before and after the tenant has occupied it will be one of the greatest defenses against security deposit disputes.
3. Security Deposit Deductions
Most states have regulations as per what can and cannot constitute a security deposit deduction. Normal wear and tear to the property can not be deducted from the deposit, however damages can be. Deductions can also be made if the tenant breaches the contract or fails to pay rent.
Security deposits can protect both tenants and property managers if they are handled correctly and can cause contention, legal issues and headache if they are not. Remember that security deposits are not additional rent and serve only to ensure that, in the event of property damage or missed rent, the property manager is able to cover the cost. The allure of receiving the security deposit upon leaving will also drive most tenants to properly care for the property, consistently make rent payments and avoid violating the contract. Certified property managers at Property Management inc actively maintain properties and communicate with tenants to keep them happy and cooperative, properly handling a security deposit can be the single most important step in this process.
To find out more about managing security deposits, contact our Property Management Inc. office.