If you’ve been a landlord for a while, you’ve probably noticed that tenants are extremely protective of their deposits. It doesn’t matter if the deposit is only $200 – tenants get upset when they don’t get their full deposit back.
Tenants know there are plenty of valid reasons you can use a portion of their deposit. However, deducting any amount of money from a deposit can lead to conflict.
You probably don’t want to spend your time arguing with tenants over a few hundred bucks, so here are 5 ways to mitigate the potential for conflict around deposits.
Tenants want to get every penny of their security deposit back after they move. One way they try to get their deposit back is by cleaning the rental unit as clean (or cleaner) than when they moved in. This way, they figure the landlord won’t need to deduct any cleaning expenses from their deposit.
Tell your tenant if you automatically hire a professional cleaner to clean your rental units after every vacancy, regardless of the unit’s condition. Give your tenants the courtesy of knowing ahead of time that you’ll be cleaning the unit so they don’t waste their time and energy.
If your tenant spends a few hours detail cleaning the unit only to find out you’ve deducted the cost of cleaning from their deposit, they’re going to be upset, and for good reason. If a tenant leaves the unit as clean as it was when they moved in, you can’t deduct cleaning fees from their deposit.
To keep it legal and to keep the peace, if you haven’t collected a non-refundable cleaning fee, you need to give tenants the option to clean the unit themselves. If you still want to use your own cleaner, that’s fine. You just can’t deduct the cost from the security deposit if the tenant has already cleaned the unit.
After a tenant vacates, evaluate the unit to see if it really needs a professional cleaner. You might need to shampoo the rugs if the tenant didn’t go that far, but don’t hire a professional house cleaner out of habit if the unit doesn’t actually require cleaning.
Texas law doesn’t allow landlords to use the deposit for rent except under very specific circumstances. When a tenant moves out, they might ask or expect you to use their deposit for rent in order to get out of having to pay rent. Decline the offer without exception.
Using a tenant’s security deposit to cover the rent under most circumstances isn’t legal, even when a tenant makes the request. By giving into their request, you’re putting yourself in a vulnerable position where the tenant might turn on you later. For example, say you use their security deposit to cover their last month’s rent, just like they asked. Don’t be surprised if your tenant sues you for not returning their deposit on time and using it as rent.
It’s great if you can prove your tenant was the one who made the request, but you still have to show up in court and spend your time, energy, and money to fight the lawsuit.
Deposits need to be fully refundable, but fees can be non-refundable.
If you have any routine charges at move-in or move-out, collect those non-refundable fees separately in addition to a security deposit. For example, if you automatically clean after a tenant vacates no matter how clean the tenant leaves the place, that cost should be designated as a non-refundable fee and should not be taken out of the tenant’s deposit.
If you take a cleaning fee out of a security deposit after a tenant cleaned the unit, the tenant will probably ask you to refund the amount you took from their deposit.
Say it costs you $75 to hire a professional cleaner after every vacancy. Get a $75 non-refundable cleaning fee in addition to your tenant’s security deposit when they sign the lease. When the tenant leaves, they will have already paid your cleaning fee and they’ll hopefully get their full deposit back. Doing it this way will make them happy and will keep your deposit deductions legal.
Whether you deduct the $75 from the security deposit or collect a cleaning fee up front, your tenant will pay the same amount of money. However, a properly separated cleaning fee won’t make your tenant feel like they’re getting the short end of the stick.
Texas law requires all landlords to provide a written description and itemized list of damages and charges a security deposit isn’t being refunded in full.
Keep all receipts for work done after a tenant vacates your rental property and send copies with an itemized list to your tenant. Make sure the copies you send to your tenant are paid receipts and not just invoices. If you send invoices, your tenant might wonder if you paid less than the invoice shows.
Try not to use overpriced services to avoid creating more tension.
For your protection and to mitigate the potential for arguments, video record all of your walk throughs including the walk through you do with your tenant before they officially move out. This way, you’ll have video documentation of what you asked the tenant to repair in order to get their deposit back.
Do you enjoy the hard work of being a landlord? Wouldn’t it be great if someone else took over the majority of your responsibilities? A property management company can!
If you don’t have time to be a landlord and want to get back to building your investment portfolio, we can help. At Green Residential, we’ll handle all the landlord duties that keep you from growing your passive income. Contact us today and we’ll provide a free analysis to determine how our property management services can benefit you.
TREC Broker License # 9001367
CALL US