Security deposits are a vital part of the rental process. Without a security deposit, there is little to stop your tenants from leaving your property in a state of disrepair; forcing you to foot the bill. That’s why every rental home now requires a security deposit. Aside from the assurance that if there is any lasting or even superficial damage to the rental property, this means you can detract money for failure to ensure your investment is left in a clean state. For this reason, we’ve compiled a handy how-to guide for using the security deposit to both your property’s and your tenants’ advantage.
Clearly explain the cost of damages in the lease agreement
This is important as it lays out exactly what is expected of the tenant in terms of personal maintenance while renting the property. By laying out how much you will charge for damage or loss to each individual aspect of the rental property, the tenant will understand how to properly maintain it, and will be held accountable for that maintenance. This will also act as an incentive to the tenant, showing them in real figures the cost for refusing to ensure proper care is taken when in the property. It’s important to do a full walk through of the property with your tenant before they move in, allowing them an opportunity to point out damages that you had not registered. This prevents misinformed accusations and increasing tensions with the tenant at the end of their tenancy. This is also for the tenant’s protection, ensuring you have to justify each deduction you made from the security deposit and assuring them you are not taking more than the damages actually warrant. Make sure this process is documented and signed by each party.
When deducting money from a tenant’s security deposit, you will need physical evidence that the damage was caused during their tenancy. That’s why, before and immediately after each tenancy, it’s important you photograph any existing damages, and even areas with no damage whatsoever. This prevents the tenant from claiming the damages were already there, or that they were inflicted after they left the property.
Have a little leeway for wear and tear
While nobody wants their property damaged without being properly compensated, it is likely that some aspects of the property will become worn, through no fault of the tenant. That’s why it can be beneficial to allow for a little wear and tear on the property. The intention of the security deposit is to insure against major structural damage or a costly cleaning job at the end, not minor bumps and scrapes in areas of the property that would inevitably see a little damage.
As a landlord, it’s important to remember you have a reputation to uphold. While some are tempted to take a little extra from the security deposit, your ethical integrity will always win you more business — which translates into more money in the end. It isn’t just a question of ethics, it’s illegal to take more than is owed. Alternatively, rent your property with Simply Residential Property Management and let our independent team of specialists handle the entire security deposit issue; allowing you and your tenants to rest easy in the knowledge only the appropriate compensation will be paid.