Do you have rental properties in Silicon Valley? Do you know the right amount of deposit to charge on your rentals? Well, then you might want to read on.
The amount of rental security deposit should be determined based on the amount of funds needed to restore the property to it’s original state if your tenants cause a lot of damage. Typically, the amount of security despot is determined by one month of rent which is the industry average. But you can ask for additional funds if you have expensive finishes in your kitchen and bathroom that are one-of-a-kind. But whether you use a property manager or not you will need to know the laws governing the ll be returned to the tenant are also clear.
Security deposit amount and collection: State laws may limit the amount of a security deposit. For example, the Landlord Protection Agency states that Michigan law limits it to 1.5 times the monthly rent. Some states also have laws may describing what the landlord must do with the deposit. Landlords may be required to deposit it with a bank, for example, in order to ensure that tenants who meet lease requirements can receive their refund.
Returning security deposit: In California, the state law requires you to return the security deposit within 30 days of the tenants leaving your property. The law also requires you that you can only deduct funds from the security deposit for damages beyond the normal wear and tear. To avoid disputes over deductions from your tenant’s security deposit, you would be smart to develop a check-list of each room’s condition and have it signed by the tenant before they move out. You can then compare this condition check-list with the one’s you had filled out with your tenant prior to their move-in. Any discrepancies would be clearly and easily identified eliminating any dispute.
Defining security deposits: In some states, any refundable up-front fees count as part of the security deposit, regardless of what they are called in the lease. In others, the lease may be used to define the security deposit, so keep language clear and specific.
We help our clients with the Move-in, Move-out checklist that can help prevent disputes over security deposits.
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