As a landlord, there's a good chance you've encountered some damage to your listings regardless of how careful the tenants are. The most common kinds of tenant damage include holes in walls, stains, water damage, and foul odors.
One of the best ways to prepare for potential damage to your investment is through the use of security deposits. A security deposit from a tenant acts as a form of reassurance. You get to use their money to fix problems that they might otherwise ignore when they leave.
Here are three things you should know about rental deposits in advance, as well as some property management tips.
1. Tenant Security Deposit Limitations
The first thing to know is that there are legal limitations on how much a landlord can charge for a renter's security deposit. According to Virginia code, no landlord can demand or receive a security deposit exceeding two months' periodic rent.
In other words, a landlord cannot charge an exorbitant amount as extra security. This is to stop them from singling out certain renters or taking much more than is needed.
Some landlords can help protect themselves by requiring both first and last month's rent upfront, but that's to help manage any loss from vacancies rather than damage.
2. Proper Usage of Security Deposits
Landlords are required to specify in rental agreements how a security deposit may be used. This usually covers factors like nonpayment of rent or property damage aside from wear and tear.
On top of that, rental deposits cannot be used while the tenant still lives on the property. If a tenant were to damage your property and refuse to fix it or allow you to fix it, then you would need to evict them first.
Tenants may have the option to pay a pet fee to cover the cost of any wear and tear their pet causes. However, the security deposit can be applied to any repair costs exceeding this initial fee.
3. Tenant Protections
As previously mentioned, a tenant's security deposit is safe until they move off of the property. If they renew a lease, their previous security deposit still applies. They may need to fulfill their maintenance responsibilities if they want to renew the lease, but that's a different issue.
If a tenant believes their deposit has been used or withheld without cause, they can pursue legal action. It's important that they show proof that they tried to communicate and resolve the issue outside of court first.
In addition, a landlord has no legal authority to evict a tenant during this process.
Know Your Landlord Responsibilities
Security deposits are an essential part of maintaining your property and protecting yourself against harmful tenants. However, it's essential that you follow the law and only use that deposit when it is necessary.
PMI Virginia provides property management services for the Virginia Beach area. We can help both commercial and residential landlords with security deposits, rent collection, maintenance, and more. Schedule a consultation today to learn more and try out our free rental analysis tool on our website.
