Landlord unsure of deposit protocol
by Robert Griswold
Q: I have a rental home located near a college and have successfully rented to students over the past few years. Typically, all of my student tenants move out when the school year ends.
This year, my current tenants are divided in their desire to stay or leave. Two of the four tenants would like to rent the house through the summer and bring in new roommates in the fall. They like the idea of not having to move out and find a new place when school starts. Because there are only two of them who will be staying during the summer they have asked me to give them a rent discount. I also don’t know what to do about their security deposit. How do I handle these issues?
A: For most landlords who rent their properties based on the traditional school year, this is an ideal situation, as you can keep your property occupied year-round.
A vacant rental property not only doesn’t generate income but the majority of damage occurs during the move-in and move-out process, so having two of your tenants willing to lease the property on an annual basis makes the extra effort on your part worthwhile.
First, you should handle the departure of the two tenants who are leaving in almost the same way you have handled the end-of-the-school-year move-outs in prior years. You should walk the property and evaluate the condition of the property and determine if there is any damage or excessive wear and tear so you know the proper deductions from the security deposit.
Unless otherwise agreed in advance, all four of your tenants are presumed to have an equal share of the security deposit.
So you can either process the security deposit refund for all tenants and collect a new security deposit from the two tenants who are staying, or you can prepare a written transfer of the security deposit in which the departing tenants relinquish their claim to the security deposit. Of course, the tenants who stay will also need to replenish the security deposit for any deductions you have made.
Over the summer, as new roommates are proposed you should process their rental applications in the same manner as with all new tenants. Once again, the roommates can work out any issues with the security deposit themselves.
This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of “Property Management for Dummies” and “Property Management Kit for Dummies” and co-author of “Real Estate Investing for Dummies.” E-mail your questions to Rental Q&A at [email protected]. Questions should be brief and cannot be answered individually.
Copyright 2010 Inman News
See Robert Griswolds feature, What Tenants Do When You Are Not Watching.
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