1. Keep the amount of the deposit under the legal limit. The majority of states do restrict the amount a landlord may charge.
2. To avoid allegations of discrimination, keep the amount you charge consistent from one tenant to the next.
3. Don’t accept payments–a prospect who can’t afford the deposit may not be able to afford rent down the road.
4. State the amount of the deposit in the lease agreement, and provide a receipt.
5. Find out if you are supposed to be paying interest on the deposit.
6. Conduct a move-in inspection, and have the tenant sign the report.
7. Perform periodic inspections to catch damage before the situation gets worse.
8. Near the end of the tenancy, offer to give the tenant a head start via a “pre-walk through” before they move out. Identify any problem areas and explain what is expected of the tenant to receive their full deposit back.
9. Document the move out, including a move out report. Ask the tenant to be present, have them sign the move out form, and get a forwarding address.
10. Discuss with the tenant at the move out if you have identified items for which you will be taking deductions so there are no surprises.
11. When deducting from the deposit, charge the actual costs – don’t estimate, round-up, or tack on a little extra for your trouble.
12. Know when you have to provide an accounting of deductions or give the deposit back. Don’t provide a shorter time period in the lease than what is required by your local laws.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
Click Here to Receive Landlord Credit Reports.
Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.