Although the security deposit is often viewed as a straightforward part of managing rentals, it carries considerable importance. If you own property in Baton Rouge, understanding the laws about tenant security deposits is crucial. Security deposits are distinct from rental payments because they are not part of your investment income. When managing security deposits, you must follow specific rules for accepting, depositing, and reimbursing these funds.
With this knowledge, you can make informed choices about the amount to charge and the legal use of the security deposit when the tenant moves out. This article will explain the basics of security deposits, equipping you with the necessary knowledge to manage them effectively from start to finish.
How much should you charge for a security deposit?
Before advertising a rental property, owners must decide how much to charge for the security deposit. Depending on your location, legal limits might exist on security deposits, so verify state and local laws before setting an amount.
Commonly, tenants are required to pay a security deposit equal to one month’s rent, along with a cleaning or pet deposit. Investigate the security deposit amounts set by other landlords in your area to maintain competitive rates. Charging too high a security deposit can deter potential tenants.
Ethically handle security deposit funds
Upon obtaining the security deposit, it’s vital to be aware of your state’s rules about where to hold it. Certain states require landlords to keep the security deposit in a separate, interest-bearing account, while others offer more flexibility.
No matter your local regulations, it’s essential to keep detailed records of the deposit’s location and avoid using the funds without legal justification.
Stay responsible with tenant security deposits
Certain situations permit landlords to keep and use a tenant’s security deposit. The most frequent reason is to cover repairs for damage exceeding normal wear and tear. This may involve repairing a broken appliance, addressing significant wall damage, or dealing with excessively stained carpet.
Note that it is illegal to withhold security deposit funds for projects not related to tenant-caused damage beyond normal wear and tear. Following these legal and ethical guidelines will help you become a responsible and fair landlord.
Other legitimate reasons to retain a tenant’s security deposit are cleaning costs, unpaid bills, and sometimes a broken lease or unpaid rent. However, some states prohibit landlords from using security deposit funds for unpaid fines or late fees, so be sure to check your local regulations.
Refund security deposits to tenants
Once the tenant leaves, you have to decide on the amount of their security deposit to be returned. When lease terms are completely met, it is the landlord’s duty to return the full refundable security deposit. Many states require this refund to be issued within a certain timeframe, generally 30 days or less. Should you withhold any security deposit funds, an itemized list of the repairs paid for is essential.
Regardless of state requirements, clearly informing your tenant about any withheld funds is a best practice to avoid misunderstandings or legal issues. Property owners who delay returning the security deposit or giving an itemized bill for deductions may face a penalty of up to three times the deposit amount.
Security deposit matters can be more intricate than they appear at first glance. Baton Rouge rental property owners count on the expertise of Real Property Management Baton Rouge professionals. Our local property management professionals, knowledgeable about state laws, can assist you with handling security deposits, rent, and tenant interactions ethically and legally. Contact us online or call at 225-389-6860 today!
Originally Published on June 18, 2021
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