what are the legal ramifications for taking security deposits for apartment rentals

In Property Management - Asked by mike f. - Oct 20, 2011
Report Abuse
Answer this Question

Answer(s)

Chris R.
Broker/Agent
Denton, TX

I'm not a lawyer but have been in property management for 42 years. Security deposits for rental properties are considered part of the job. Many states have specific requirements for accepting and holding and accounting for security deposits and setting up an account to hold those funds separate and apart from those funds of the property manager so check with your state license laws for same.
In Texas - generally - an accounting of security deposit funds must be made to the tenant upon 30 days of move out - in whole or in part as to any deducitons that are made for any outstanding charges. There are rules both sides must adhere to but generally all must be done within 30 days. This may vary from state to state. Deposits are there to ensure compliance with the terms of the lease and must be properly accounted for after move out before any or all of it can be converted to use to offset expenses and obligations of the former tenant. Deductions can be made from a security deposit for any rents and fees owed as well as damages and repairs beyond normal and reasonable wear and tear.

Oct 20, 2011
Report Abuse
Jody J.
Broker/Agent
Charlotte, NC

It depends often on the state in which the property is located and if the individual accepting the deposit is the owner and/or whether they are a licensed real estate broker or not. For example, in North Carolina, where I practice, there is an entire statue that deals with accepting security deposits for residential leases, holding the deposit in an escrow or trust account or whether the deposit can be bonded. It also of course depends on the terms of the lease. A local attorney or real estate broker might be able to direct you to the guidelines for your state.

Oct 21, 2011
Report Abuse
Adebo F.
Owner/Investor
New Castle, PA

Most and all states that I am aware of requires that a landlord set up accounting to itemize and detail each tenant's security desposit. And upon end of lease, each tenants security deposit MUST be returned back to the tenants less amount taken out for damages caused by tenants. Most states require that the amounts deducted from the security deposit MUST be reasonable and returned within a sepcified period, mostly within 30-days. Several legal penalties are levied against landlords that failed to return this detail deuctions and return tenants' security deposits within the specified period, such as landlord being made to pay three times the amount owed.

Oct 23, 2011
Report Abuse

Welcome to Answers

LoopNet Answers is where the commercial real estate community shares what they know to help each other out. And it's all for free.

Ask a question to get advice from brokers, investors, professionals and local experts.

Answer questions to raise your visibility as a trusted advisor and build new relationships.

Ask a Question

Post Question