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3 Tips for Minimizing Security Deposit Disagreements


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For the vast majority of multi family rental property investors, managing tenants is simply part of the deal when renting a property.  Unless you strictly follow a buy-and-flip strategy, or you can somehow afford to hire a property management company, you will have a variety of landlord responsibilities to oversee.  Being a landlord can sometimes be a real hassle, but there are some things you directly control, including the security deposit policy.

It is important to collect the maximum security deposit allowed by state law, and it is equally important to maintain a well-defined security deposit policy that will serve to minimize disputes.  You can find information on your state’s security deposit requirements here. For tips to minimize deposit disputes, read on.

First and foremost, be aware that you can only deduct the costs of legitimate damages caused by the tenant, not costs associated with normal wear and tear.  Don’t try to charge for normal wear and tear because any semi-intelligent tenant can easily go online to find out their state’s landlord tenant laws.  The risk of landing in legal hot water is not worth playing games with tenant security deposits.

Secondly, always do move-in and move-out inspections, and communicate your expectations to the tenant as you do so.  Use an inspection checklist and take pictures of the before and after.  Documenting damages using this “before and after” approach will help to remove the ambiguity from the process.

Finally, if a tenant moves out and you determine that you need to deduct money from their security deposit to cover repair expenses, make sure your deductions are fair and accurate and clearly communicated to the tenant.  Do not round the numbers; go down to the penny and provide copies of the receipts to the tenant along with a letter that fully itemizes everything.  You might also want to have a chat with the tenant in addition to sending the letter, in order to clear up any confusion and address any tenant concerns.

So, that’s really all there is to it!  Follow the advice in this post, and you’ll be able to minimize the occurrence of security deposit disputes, which will generally make your landlord experience a little less stressful.  Good luck and happy renting!



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