When you are asking for a security deposit for the first time, it's important to learn about the law regarding security deposits. Different states have different requirements regarding how you can collect a security deposit and how large the deposit can be. If you are not sure whether you are following the rules regarding security deposits, you should consult with a landlord-tenant lawyer.
The Maximum Security Deposit
Some states place a cap on the maximum security deposit that a landlord can take. For example, in New York, a landlord is not allowed to collect more than one month's worth of rent. However, you are allowed to collect less than this especially when you feel that the full month of rent is not necessary or if you want to attract more applicants.
How to Store the Security Deposit
The security deposit is not something that you can simply spend; it must be kept in a separate account. You might be required to place the security deposit in an account that earns interest and the tenant may be entitled to collect the interest.
Some landlords unfortunately will not follow the law and might collect a security deposit while claiming that it is not refundable. However, this is illegal. You are only allowed to keep the security deposit if the apartment is damaged after the tenant moves out and you can then use the deposit to pay for the damage.
Understand the Situations in Which You Can Use the Security Deposit
All apartments are expected to experience normal wear and tear. However, you can use the security deposit to deduct unreasonable wear and tear. Also, if a large amount of garbage was left behind, you may use the security deposit to pay for the removal of the garbage.
After you have deducted any expenses, you must return the security deposit to the tenant within the time frame required by law. You must also detail each of the deductions you have made.
When the Tenant Sues
If you deduct damage from the security deposit, the tenant might choose to dispute the damage and may file a lawsuit. For example, the tenant might have taken photographs of the apartment immediately after moving in and might argue that the damage existed prior to moving in and that they didn't cause it.
If this is the case, you might be forced to fight your case in small claims court. While some states do not allow attorneys in small claims court, you may still consult with one prior to attending court.Share