Rent and Security Deposit Tips
After all the work landlords do to make sure their rental units are habitable and comfortable, collecting rent and security deposits probably seems like the easy part. However, there are certain rules landlords must follow when taking their tenant's money. Here are some quick tips to help landlords avoid making a legal misstep.
Tips for Handling Rent
There are few rules about collecting rent. Nevertheless, it's best to treat the payment of rent with some care, since a mistake could potentially lead to a legal dispute.
- Be clear about the amount of rent due, the due date, and the method of payment. It's best to put these provisions in the lease, so that the tenant can always check back when necessary. If any of these terms change, be sure to send written notice to the tenant as soon as possible.
- Provide a receipt. Some states or cities may require you to do so anyway. There are typically no major requirements to a receipt. An email that says "I have received your rent today, thank you!" may be sufficient. However, a receipt should typically state the date the rent was received, the amount received, the name of the tenant, the tenant's unit number, and the dates covered by the rent.
Tips for Handling Security Deposits
Handling security deposits is a bit trickier. That's because many jurisdictions consider the security deposit to be the tenant's money, even though it's in the landlord's possession. Consequently, your state or city may require you to keep security deposits separate from your own money or deposit them in an interest bearing account. Some states also limit the amount of a security deposit.
There are also rules about the types of repairs you can make using the security deposit. Generally, you only use the security deposit to fix damage caused by the tenant, and not "normal wear and tear." Normal wear and tear includes things like:
- Furniture marks and a reasonable amount of wear on the carpet,
- Warped doors and windows due to age,
- Dents in the walls from door handles,
- Replacement smoke detector batteries, etc.
The rules for returning the security deposit vary by state. Some states require landlords to list any repairs made with the security deposit along with their cost. Many states have deadlines by which the security deposit must be returned, so don't delay making repairs when the tenant moves out.
Finally, if you decide to collect last month's rent instead of a security deposit, generally you can only use that money as the last month's rent, as opposed to using it to pay for any repairs to the unit, regardless of what caused them.