Rent and Security Deposits
Paying your rent is probably the simplest part of renting a house or apartment, assuming you have the money; you simply pay the rent according to these terms set in the rental agreement. However, it is a very important part of the rental arrangement and there are laws that solely address the paying of rent and security deposits. Security deposits are sums of money held by the landlord to pay for any damage in the unit at the end of the lease period, and state laws dictate how soon it must be repaid after the lease ends. This section includes information about rent and rent control, in-depth tips on paying security deposits, how to protect your security deposit, rules and advice for landlords, and more.
For Landlords: Handling the Rent and Security Deposit
Managing a rental property can be hard work, particularly for properties that require extra maintenance and upkeep. While collecting money from tenants each month seems simple enough, there are certain steps you can take to minimize any confusion about rent and due dates, and to ensure payment on time. Suggestions include the following:
- Make sure the rent amount, due date, and method of payment are clearly written in the signed lease agreement
- Provide the tenant with a receipt each time they pay rent, which could protect you in the event of a dispute
The handling of security deposits may be determined in part by your state's laws, many of which require landlords to keep deposits separate from other income (sometimes in an interest-bearing account). And keep in mind that many states limit the amount of security deposit a landlord may request, typically based on the rental amount. For instance, some states limit the deposit to twice the amount of rent.
If you collect last month's rent in addition to, or instead of a deposit, you may not use it pay for repairs or otherwise as you would a deposit.
For Tenants: Security Deposits at a Glance
Most landlords require the payment of a deposit prior to the start of the lease period, which is either held in escrow, kept on file, or otherwise accounted for. When the lease ends, the landlord may use the deposit to pay for repairs or professional cleaning. If your landlord asks for last month's rent, keep in mind that this is not the same as a deposit (it is simply a prepayment). Therefore, landlords may ask tenants for both first and last month's rent in addition to a deposit.
As a tenant, don't assume your landlord will simply put the check in your file and return it all once your lease is up. In order to protect yourself, make sure your landlord gives you a written receipt for the deposit (and last month's rent, if applicable). The receipt should include the amount paid, date on which payment was received, purpose of the payment (i.e. "security deposit"), names of the parties involved, and the landlord or property manager's signature.
Some state's require landlords to pay interest on the security deposit and prepayment of last month's rent, so check your state laws.
It's also very important to take stock of the condition of the rental unit before you move in, perhaps including photographs where necessary, and have the landlord sign off. That way, the landlord cannot charge you for damage that existed prior to your lease. When it comes time to reclaim your deposit (or what's left of it), make sure the landlord gives you an itemized list of damages and written estimates.
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