How do you handle security deposits for your Northern Virginia property? This question comes up a lot. Landlords often need help with how to disburse money, manage the requirements, and meet the timelines.
Collecting a Security Deposit
Your security deposit is just that: security. You have the money to fix whatever needs to be fixed if something happens to your property or gets damaged while the tenant is living there. When you collect a security deposit, you need to put it in a separate account. It cannot co-mingle with the money in your personal checking or savings accounts. Be clear about how much money went in. At the end of the lease, you’ll need to establish how much of the deposit was dedicated to repairs, and how much was given back to the tenant.
Avoiding Security Deposit Disputes
You need to disburse your tenant’s security deposit money within 45 days of your tenant moving out. Do your move-out inspection quickly, so you can assess any damages done by the tenant. You want to have enough time to get estimates and make repairs. When you disburse the security deposit, you have to provide proper accounting. If you collected a security deposit of $1,500, and you have $400 of repairs, you need to demonstrate what was charged.
For example, you’ll need to show that you paid to repair damaged drywall from a hole the tenants made in a wall, or to replace carpet that a pet tore up. You cannot make up arbitrary numbers; you need legitimate invoices from vendors. If you don’t do it within 45 days, the tenant can take you to court and get their security deposit back, even if they caused the damages you claim they caused.
Security Deposit Tips
Conduct a detailed move-in and move-out inspection with video. Take video of the whole house, including the floors, the walls, and the closets. Open drawers and appliances. Have tenants do a good move-in inspection form, and have them return it to you within 10 days. When they move out, do the same thing. Take videos again, and compare them. That will show the damage.
Things like carpet and paint have a certain lifespan. These are wear and tear items that you cannot charge for. Make sure you understand the difference between damage and wear and tear. You need to get it right when it comes to the security deposit.
Meet the requirements so you don’t get in trouble.
If you need advice about security deposits or Northern Virginia property management, please contact us at Richey Property Management.