What are the reasons I can keep a tenant’s security deposit?

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They say one of the biggest points of contention in a relationship is money. That’s especially true when the relationship is between a landlord and a tenant, and one major pain point is the security deposit.

In most states, security deposit laws exist to assist landlords in recouping potential damages to rental units. However, keep in mind that security deposits are still the tenant’s funds and should only be used for cleaning and damages due to that particular tenant’s use of the rental unit. Security deposits aren’t meant for normal wear and tear or for a landlord to significantly improve the rental unit.

The reason’s you can keep a security deposit will vary from state to state, but here are some common reasons you can legally withhold a security deposit:

  1. A tenant breaks their lease.

    One reason it’s important to have an ironclad lease agreement is so that you can legally keep a security deposit if the tenant moves out before their lease is up or fails to give you 30-days notice before leaving.

  2. There is excessive damage.

    You might hear the phrase “normal wear-and-tear” thrown around a lot, but what does that mean? Typically it refers to small nail holes, loose hinges, scuffed floors, and matted carpet; things that would happen just by normal activity in a property. You can’t use a security deposit to pay for those things, but you CAN use it to pay for holes in walls, large stains on the carpet, broken windows, and water damage from carelessness. For a more detailed list of what is legally considered wear-and-tear, Nolo is a great reference.

  3. Past-due utilities.

    If the utilities are under your name and a tenant fails to pay the balance they owe before moving out, you may use their security deposit to cover it.

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