Security deposits can be difficult for landlords to manage, especially when it’s not clear what can be deducted from the tenant’s deposit. We are explaining a few important things that need to be considered when you’re collecting and returning those security deposits.
Condition Move In Reports are Required
One of the most common mistakes we see landlords make is they aren’t doing a condition move in report when the tenant moves in. You cannot legally take deposit from a tenant without having that done. It’s as simple as a sheet of paper that goes through each room in the property and identifies the current condition of the property. It needs to be signed and dated by both the landlord and the tenant at the time of move in.
Do Not Deduct for Wear and Tear
Things you cannot deduct from a security deposit include anything that results from normal wear and tear. Defining that is sometimes a challenge, but we have a couple of examples. Nail holes where pictures were hung, little scuff marks on walls and door jambs, and things of that nature are wear and tear. The longer a tenant lives in your property, the larger your scope of wear and tear becomes. There is a shelf life for paint and carpet. Everything ages.
Pay Attention to Security Deposit Time Frames
One of the things that is changing is right now is the time in which you have to return a deposit. Right now, you have 14 days from the time the tenant turns in the keys to reconcile the deposit and refund the unused money back to the tenant. On June 9, 2016, that’s changing. You’ll have 21 days from the time that the keys are surrendered. That gives you a little more time to do the job and get the exact costs so you can deduct those numbers from the deposit.
Keep Security Deposit Funds Separate
The security deposit is designed to be a stand-alone amount of money. It must be held in a trust account in a separate institution. It cannot be co-mingled with any money in your accounts. Make sure you aren’t using those funds for other purposes.
If you’re not sure about what’s required when it comes to security deposits or if you have a general question about Olympia property management, please contact us at T.J. Guyer Property Management. We’d be happy to help you.