Landlords: Know Your Security Deposit Obligations

For landlords, security deposits are often one of the most misunderstood areas of responsibility. While almost all landlords will collect a security deposit when a new tenant moves in, few of them truly understand their rights and obligations when it comes to what can and can’t be done with the money. The following are several of the most important things to know about security deposits as a landlord.

You Can Use the Money to Repair Damage Caused by the Tenant

If a tenant causes damage to your property, you can use the money from the security deposit to make repairs. One thing to keep in mind here is that damage is not the same as normal wear and tear. Things like small holes from nails in the walls to hang pictures, minor stains on carpeting, and mildew in the bathroom grout is not considered damage. Major holes in the walls, significant damage to appliances, and things of that nature, however, would be seen as damage and can be paid for.

You Can NOT Use the Money for Normal Cleaning Costs

Landlords are expected to have the property cleaned after each tenant, and that is considered a normal expense associated with conducting business. Whether you do the cleaning yourself, or hire a company to do it for you, it can’t be paid for from the previous tenant’s security deposit. If the tenant leaves an unreasonable amount of trash, belongings, and other things that need to be removed, however, that can be covered by the security deposit.

You Can Use the Money to Cover Costs Associated with an Early Termination of a Lease

If a tenant breaks their lease, their security deposit can be used to cover reasonable costs associated with the early termination. Ideally, the lease agreement would specify how much of the security deposit would be kept in the event that the tenant terminates the lease early.

You can NOT Use the Money to Cover Issues Caused by Age

Carpets, appliances, (fading) paint and wallpaper, are all things that wear out over time. If an appliance breaks down simply because it is getting old, the tenant is not responsible for this, so their money can’t be used to fix or replace it. Tenants are expected to use the home or apartment in a normal way, which includes using all the appliances. Leaking pipes, cracks in the driveway, and other similar things are also going to be considered normal wear and tear in most cases.

You Can Use the Money for Animal Related Issues

Even if you allow tenants to have animals on the property, they must make a reasonable effort to ensure they don’t cause damage. If a dog chews up the carpet, for example, the security deposit can be used to have it replaced.

You Can NOT Use a Security Deposit as Leverage

You can’t threaten a tenant with keeping their security deposit if they don’t do something outside of their normal responsibilities. In order to keep a security deposit, you must be able to document exactly why you are keeping it, including the dollar amount. Telling a tenant, for example, that you won’t give them their deposit back unless they leave the property prior to the end of the lease, is not permitted.

Talk to An Attorney

Knowing what you can and can’t do with a tenant’s security deposit is very important. If you have specific questions, please contact us to talk with an attorney and get answers about your exact situation.

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Written by Reyes Law Group