Residential Landlords: Know How to Handle Security Deposits

If you have investment funds burning a hole in your pocket, real estate may seem like a great way to round out your portfolio. For many potential buyers, the plan seems simple—buy a home (or two or three), fix it up, and find suitable tenants. Then, all you must do (in a perfect world) is collect rent each month and use it toward paying the mortgage on the property—or if it is already paid off, even better as you have gravy money to apply toward your own bills.

Often though, the realm of rental properties is anything but perfect, and you may be dealing with headaches from the moment you buy real estate—and until you sell it. Making sure the rental home you are offering is comfortable and safe to live in is your first responsibility. After that, finding a good tenant comes next. Once you have reached that level, you may find that you are responsible for so many things that being a landlord is very much like owning your own business. The rent money may be flowing in but most likely you are responsible for property maintenance, fixing nearly everything that breaks, maintaining harmony between neighbors if you own several properties or a building, and handling all the finances for paying mortgages, insurance, and more.

You are also responsible for handling the security deposit according to law. The first rule is to make sure it is available to give back once the tenant leaves. Along with that, following the rules regarding security deposits can begin as soon as you start advertising your space for rent. As the landlord, what you can ask for is limited. If the space is unfurnished, an amount up to two months of rent can be required—and if it is furnished, you can ask for a deposit equaling three months of rent. The deposit must be considered refundable, although in the end portions of it may be kept for rent that wasn’t paid, property damages, or more—although itemized accounting must be presented to the tenant with specific documentation and receipts regarding any repairs and/or materials.

By California law, the deposit should be returned within 21 days of the tenant moving out. If you have questions about being a landlord, leases, or what to do regarding non-payment of rent or evictions, consult with an experienced attorney like Shane Coons right away to protect your property. Call now at 949-333-0900 or email us at Shane.Coons@seclawoffices.com. We will be glad to meet with you to review your case and explain your legal options. Our office is here to help!

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Residential Landlords: Know How to Handle Security Deposits

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