Security Deposits

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!




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.



Deposits are refundable therefore must be available when tenant moves out. There must be a clear understanding of what damages would cause a tenant to forfeit any part of their deposit thus the purpose of the Property Condition Report, lease, and pet agreements.

On the lease start date, we meet the tenant and provide him with a Property Condition Report used to record things in the home that appear to be damaged so the tenant does not get blamed when moving out. The tenant and Manager sign the document and it is filed until the tenant moves out. The tenant hands over the full amount of the security deposit and it sits in our Suntrust Trust account until the tenant moves out. We do not accept personal checks for the security deposit – only  money orders or cashier’s checks.



Since the security deposit is the only leverage if things go wrong, we require a minimum of one full month’s rent. Depending on the tenant’s financial statement (low credit score, foreclosure, medical bills), we may require an additional month’s rent.



Security deposits are used to incent good behavior and to clean up the property prior to moving out. We specify in the lease that the security deposit may not be used for the last month’s rent when the tenant is ready to move out as this results in a loss of leverage to ensure a clean home is returned back to us. We provide the tenant with a document outlining what we expect to be done to the home in order to get their security deposit returned. The tenant schedules a move-out when he is ready and we walk through the home (most often with the Tenant) using the original Property Condition Report. He is required to make sure the property is returned to the same rent-able condition as when he received it.

“Normal wear and spilled-winetear*” cannot be deducted from the security deposit. We record damage but give the tenant an opportunity to correct the issues. Once we have documented items which will be deducted from the security deposit, we obtain an estimate from our contractors and use that amount. We do everything we can to ensure the tenant gets as much as possible of his security deposit but ensure that the tenant honors all parts of the lease and that they return the property with no damages that would be “above and beyond normal wear and tear”. If there are any maintenance issues or damages that are chargeable to the tenant, we will deduct those sums from the deposit before returning any balance to them. Within 30 days of the move out, we forward to the tenant a written letter documenting reasonable repairs and items, condition and cost to fix along with a check for the balance of the security deposit.

Any monies retained for damages will be applied to the repair prior to the home going back on the market. Any monies left over will be credited to the owner.



State law does not allow owners to charge tenants for anything that is considered normal wear and tear. For example, it means we cannot charge a tenant for any of the cost of painting the house to make it ready for the next tenant nor can we charge a tenant for the path in the carpet made down the hall to the bedrooms. But we can charge for the Kool-aid stain in the dining room. Normal Wear and Tear is best defined as “The inevitable physical decline of the condition of a property from time and usage. Normal wear-and-tear increases over the useful life of any property or asset. It results from normal usage by its occupants as well as from weather and other natural forces that surround it.”