As the owner of a rental property, you are constantly experiencing “tenant turnover”: when one tenant moves out, and a new one moves in.
Usually, this process can go pretty smoothly, especially if you’ve been able to find a new tenant quickly and painlessly (with the help of a property management company, perhaps). It might get trickier, however, if any problems arise concerning the old tenant’s security deposit.
If all goes well, your property will be in relatively the same condition it was when the tenant moved in, and you’ll be able to give them back their deposit, no questions asked. Of course, it’s not always that simple. Here are a few things to keep in mind when trying to decide whether or not your tenant should get their security deposit back.
Are terms on the security deposit outlined in your lease?
Make sure you review the lease for the specific language and terms concerning the security deposit. You may also want to consult a property management company or lawyer concerning your tenant’s rights in your state. It is imperative that you understand the law, and act within it, in case you find it necessary to withhold a tenant’s deposit return.
Is there damage done to the property beyond “normal wear and tear?”
Usually, normal wear and tear on a property cannot be considered enough of a reason to hold back a tenant’s security deposit. Matted or worn out carpet in high traffic areas, for example, would probably be considered normal wear and tear. Broken fixtures, on the other hand, could be considered damage.
Are you sure the damage was caused by the tenant?
Hopefully, you have good documentation of the property flaws that were there before the tenant moved in. If not, it may be your word against theirs when it comes to whether or not they inflicted the damage you are accusing them of. Review any pictures you took, communication from the tenant, or service/maintenance receipts to try to get a good picture of when the damage might have happened.
Did the tenant inform you of needed repairs or maintenance?
Your tenant should let you know when something is broken (think sprinkler heads, garbage disposals, dishwashers, etc.). If they don’t, the damage could get worse, and you might be justified in withholding their deposit. Again, it depends largely on the terms of your lease and tenants’ rights in your state.
Is the tenant caught up on payments?
If the tenant is behind on rent or utility payments, you may be able to keep the security deposit to cover those things. Similarly, if your tenant didn’t give you the proper amount of notice before vacating the property, you may be able to withhold one month’s rent from their deposit return.
Hopefully, tenant turnover will go smoothly and you won’t have to fight over whether or not to return a tenant’s deposit. If you need help managing or making decisions like this about your rental property, consider hiring a property management company. Real Property Management can help you manage all aspects of your property, from marketing and showing to payment collection and evictions. Give us a call at 480-719-1243 to see how we can help you turn your rental property into a profitable investment.