Handling A Tenant's Security Deposit

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 and not co-mingle it with other money in your personal checking or savings accounts. Make sure to keep track of exactly how much you received and document this. At the end of the lease, you’ll need to establish how much of the deposit was withheld and applied 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 the lease end date. Do your move-out inspection quickly, so you can assess any damages done by the tenant and 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 document 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 dispurse the deposit (or deposit balance) 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 photos and 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 a week to 10 days. When the tenants do move out, do a thorough move-out inspection and take photos and videos again, and compare them to the ones from the move-in to assess any damage.
Things like carpet and paint have a certain lifespan. These are wear and tear items that you cannot charge for so 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.

Just make sure you understand the rules and timeframes and that you meet the requirements so you don’t get in trouble or lose money.