Security deposits are used to motivate tenants to take care of your property and are used to recoup damage they cause, ensure rents will be paid, and other responsibilities of the lease are performed. But there are state laws governing the use and protection of these funds and if not handled correctly, you could lose your right to keep any portion of the deposit and could even end up owing your tenant!
HOW WE HANDLE SECURITY DEPOSITS: We maintain a trust account with a local bank. Since deposits are legally the tenant’s, we keep these funds separate and account for them monthly as required by Georgia law. For the properties that we manage, we require our owners to allow us to hold and manage these deposits, protecting the owner from any potential liability.
When tenants move in, the lease they sign has a detailed list of move-out requirements. At the move-out, we check the move-in walk-through document against the move-out list. The tenant is responsible for the cost of almost all the damages, wear and tear excepted.
We send the tenant an itemized reconciliation of their deposit. Any tenant-caused damage cost is kept and used to repair the home for the next tenant.
When handling security deposits, make sure you are operating within the law because fines are really hefty if you abuse it.