4 Steps of the Security Deposit

by Andrea West


Posted on 2017-08-31 09:40:08


The most difficult aspect of the security deposit is that it’s important at the beginning and end of a resident’s lease with you, but in between those times it floats around unused and seemingly forgotten.

Does that mean landlords don’t need to worry about deposits as much as they worry about everything else with their rental properties? Absolutely not.


Like with everything else, there are laws relating to rent deposits which differ according to the state you own rental property. For example, in Florida, landlords have to disclose in writing what type of interest bearing account the deposit is being held in. California requires the deposit to be returned within twenty-one days. In Utah, landlords must put in writing terms upon which a security deposit is nonrefundable. To see what the security deposit laws are in your state, you can visit the Nolo website.

To help you keep track of your deposits amongst everything else that requires your attention, here is a list of four steps -

  1. Receive - When your new tenant signs a residential lease, let them know how much they will have to pay for the deposit. Don’t hand over the keys until they have paid it.
  2. Store - That deposit money is not yours. While the tenant is living on your properties, store the deposit in a secure place, where it won’t get mixed up with your other property finances.
  3. List - When your tenant alerts you that they will be moving out, get ready for the move-out process. One step you will need to do is make a move-out inspection. During this inspection, write a list and document the reasons for deposit deductions.
  4. Return - Turn the list into an invoice that details the price of your deductions. Return the invoice and their deposit within the state-specified time.


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