Many tenants are blissfully unaware of the headaches their landlords deal with all the time. That leaky roof they just replaced? It may have cost them thousands of dollars-many times the cost of rent.
It gets much, much worse when the tenants are the cause of the problem. Accidentally breaking a pipe and causing a flood can easily require a multi-thousand-dollar renovation. Thankfully, a property owner does have some protection: security deposits.
Everybody knows that you pay the security deposit before moving in, and then get it back when moving out. However, a lot of misconceptions float around about them. We are here to separate fact from fiction.
Here are three important things every landlord needs to know about security deposits.
1. Proper Use of Security Deposits
Many landlords falsely assume they can use the security deposit for anything they like. For example, replacing that threadbare carpet left behind by tenants. That would be a mistake since you can only use security deposits for the following reasons:
- Fixing anything beyond normal wear-and-tear
- Costly cleaning of a turned-over apartment
- Breach of the lease
- Rent nonpayment
- Unpaid utility bills
The law concerning the use of security deposits changes from place to place. In Atlanta, as an example, what determines wear-and-tear is how long the tenant has lived there. If your tenant has been in the home for five years, the court anticipates more damage than from a tenant of one year.
2. Limit on Security Deposit Size
In some states, a security deposit can be as big as you like. In Georgia, however, the limit is usually one month's rent. There may be reasons to increase the size of the security deposit.
For example, your tenant may have to pay extra if they have pets. Or, if they decide to make changes to the property. A furnished apartment could also command a higher security deposit to account for potential damage to furniture.
Make sure to double and triple-check that you are charging a legal amount. Otherwise, the tenant can take the contract to court and get a nice settlement from you. Use our landlord help resources for more details.
3. Returning the Security Deposit
On all types of property, there is a deadline for returning the deposit. You only have a brief window to determine whether you will be returning some or all of the amount.
In Atlanta, like most places, you have a full 30 days to do so. It's a good idea to provide an itemized list detailing each and every deduction, plus the amount withheld. This makes it clear if and why you withheld anything, in case the tenant wants to dispute it.
Manage Your Property With PMI
Security deposits are one of the most straightforward ways for landlords to obtain remuneration from a bad tenant. Before you set, collect, or return the security deposit, know the law. Charging too much or returning too little could get you in big trouble.
PMI in North Atlanta helps you with all the trials and tribulations of homeownership. Use our free rental analysis. Let us manage your property so you can take it easy.