The rules for a security deposit can be very confusing. Most landlords require a security deposit, but once the tenant moves, there can be a dispute with the tenant regarding their deposit. They believe that the unit was tidy and clean. You noticed damage or lack of cleanliness. What can landlord deduct from a security deposit? It’ll depend on laws in your state, but here are some general rules and concepts that can help.
General Rules for Withholding
The landlord can withhold the deposit to be put towards damages. The damages could be material or financial in nature. This means that you can deduct for damages that go beyond normal wear and tear as well as past due rents or fees the tenant owes.
State Laws in Your Area
It’s important that you research the exact laws that impact a deposit. For example, some states require that the money is put into an account that will make interest on deposits. They also might dictate whether you can mingle the deposits with your personal or business bank account.
The biggest part of the law in your state will tell you what you can and can’t deduct from the deposit as well as the time frame for returning the money or the written notice you must provide if you’re only returning a partial deposit.
Good Rules for Landlords
You can develop your own guidelines that will keep you safe and secure that you’re taking all the right steps for collecting and reimbursing deposits.
Prior to the tenant moving into the unit, it’s great for you and the tenant to walk around and make note of all the areas. The tenant can sign the condition checklist. This will give you both a base to compare when the tenant moves out of the unit.
When the tenant moves, do a walk-through together if possible. This is the time to make note of any repairs that will be the tenant’s responsibility. If the tenant doesn’t show up for the walk-through of the unit, you should take pictures and list the damages. This is especially important if you plan on keeping part of the deposit for the repairs and damages.
Unpaid Rent and Abandonment
A tenant who abandons the apartment and doesn’t pay rent leaves themselves open to losing their deposit. Landlords question, “What can landlord deduct from a security deposit?” This is because they’re usually questioning an unusual scenario like this. When the tenant owes money for rent, you can take it from the last month’s rent they paid on move-in day. They are also responsible for not giving you notice though.
While you can’t automatically keep the deposit because a tenant leaves the rental, you might be able to if the tenant breaks the lease. It will depend on whether the tenant left owing rent, fees like parking or utility bills. You can apply the deposit to financial damages as well as real damages and repairs.
If the deposit is used to pay a part of the last month’s rent because you didn’t ask for that at the start, you are responsible for returning the rest of the funds to the tenant.
A tenant who doesn’t pay the rent but continues to live in the unit should be evicted as soon as possible. The amount of a deposit is usually one month, which means that you could end up with a few months’ rent coming out of your own pocket while you fight to evict then rent the unit to a new tenant.
The Concept of Normal Wear and Tear
When asking, “What can landlord deduct from a security deposit?” it’s often a landlord who has a messy unit on his or her hands. Normal wear and tear can’t be avoided because the tenant has to have reasonable use of the apartment during their tenancy. The landlord isn’t allowed to deduct normal wear and tear from the security deposit when a tenant moves.
Normal wear and tear would be considered wallpaper or paint that has faded from the sun. Nail holes from hanging pictures is usually not deductible from the deposit either. Repair to windows and doors that have become stuck or warped due to moisture or age can’t be taken from the tenant’s deposit.
There’s a natural deterioration that happens as the building ages. That can’t be the tenant’s responsibility. If the deterioration comes from repeated abuse, negligence or carelessness from the tenant, it could be deducted from the deposit.
Cleaning and Damage to the Unit
Large holes in the walls are an obvious deduction from the security deposit. Others might be broken or missing window screens, appliances broken due to abuse, dirt, and filth from a tenant who didn’t clean properly and damages from lack of proper use.
A landlord who has to pick up and remove small items from the unit doesn’t have grounds to withhold the deposit. Often, it can be more hassle than it’s worth. Taking a broom to the unit to sweep it clean shouldn’t be a problem, but if there’s trash and junk all over the unit, that can be worth keeping a part of the money.
Every few years, the unit should be painted. A simple paint job that is common to a unit that needs to be rented shouldn’t be grounds for keeping a deposit. If the tenant painted in a terrible color or painted art on the walls that needs extra work, that can cause them to forfeit some of their money.
Some long-term tenants like to paint themselves every few years. If that’s the case and the tenant made improvements, you might want to thank them when returning the deposit in full.
When you are planning to keep the deposit, document all the work and provide receipts for all the materials needed to make the repairs. What can landlord deduct from a security deposit will always depend on the state laws as well as restrictions in the lease, how much is normal wear and tear and what goes beyond normal.