When it’s time for a tenant to move out, there are several requirements that you will need to fulfill as a landlord. Some of these rules will apply in most situations involving the end of a tenancy, whereas others will only come into play in the event of a disagreement. One of the best ways that you can prepare for any situation that arises at the end of a tenancy is to have a detailed and consistent process that you follow with all tenants when they are preparing to move out. This helps to eliminate confusion and miscommunications by setting clear expectations, and also helps to protect you in the event of a legal dispute.
A good way to begin the move-out process is to send a move-out letter to your tenant detailing what the process will be going forward in terms of cleaning and preparing the unit for move-out, as well as what the procedures will be relative to the tenant’s security deposit. This helps to clearly communicate your expectations to the tenant ahead of time, and also gives them the opportunity to ask questions or alert you to any potential problems. You will also want to complete a move-out checklist with the tenant (which is required in some states), and ideally do a walk-through of the unit with them so that you can review and discuss any potential damage together. You can also take photographs at this time to add to the photographs you may have taken before the tenant moved in so as to have a record of the before-and-after condition of the property.
Returning Security Deposits
The rules for returning security deposits can vary by state, but a few general principles apply in most places. For example, while you usually can deduct from the security deposit for actual damage to the unit, you cannot usually take money out for ordinary wear and tear. The longer a tenant has been there, the more wear and tear there will be; for shorter term tenants who do more specific damage it may be easier to make security deposit deductions.
Typically you have somewhere between 14 and 30 days to return the security deposit, though it is often best to be as prompt as possible. When you return the security deposit to the tenant, which must be done by mail in some states, be sure to include an itemized statement, which is also required in some states, detailing any deductions you are making. This is important to do even if you are returning all of the money, along with any interest required under applicable law.
When landlords deduct funds from security deposits, these deductions tend to be highly disputed, so it is important to bear in mind that you will want to have solid reasons for any of the withholdings you plan to make. In general you are trying to take out only as much money as you need to get the unit back to the condition it was in before the tenant moved in. It is usually best to be conservative in terms of the amounts you withhold, and not to charge for replacements when a repair will be sufficient. Even if you feel you would be justified in taking out more money, it is often not worth the additional disagreements and potential legal processes that may ensue. In the event of a future dispute, it is ideal to have kept receipts for cleaning, repairs, and other services that led to security deposit deductions. And if a client fails to pay rent or agreed-upon utility charges, you may deduct for those items as well.
If a tenant asks you to use their security deposit as their last month’s rent, assuming you live in a jurisdiction where that is legal, before you say yes, it is in your best interest to inspect the rental unit to ensure that you will not need to use the security deposit funds for repairs. It is also important to send the tenant documentation detailing the fact that the security deposit was used for rent if you agree to that request.
Failure to Give Proper Notice, Pay Rent, or Vacate the Rental
In when a tenant leaves with the appropriate amount of notice and pays all of the rent they owe, you generally only need to use the security deposit for repairs and/or cleaning. In month-to-month tenancies where a tenant gives less than 30 days’ notice before moving, owes you rent, or stays beyond the final date they have paid rent for, you can generally deduct from the security deposit accordingly. In long-term lease situations, if a tenant gives you less than 30 days’ notice before leaving they will generally owe you rent for that month. However, if they leave with more than 30 days left on the lease, you will typically have a duty to re-rent the unit. If you must evict a tenant who has overstayed their lease, you can obtain a judgment requiring them to leave due to unpaid rent, and can later deduct the judgment from the security deposit once cleaning and repair costs have come out.
If a tenant takes legal action against you over a security deposit withholding disagreement, it will usually be in small claims court. Before things get to that point, it is advisable to try to work out a compromise with the tenant, perhaps through mediation. Even if you don’t feel you should have to, it can be wise to settle a dispute of this nature by offering to give back more of the security deposit, as this will undoubtedly be cheaper and faster in the long run than defending against legal proceedings. If you do reach a settlement, make sure to reduce it to writing and require the tenant to dismiss any claims they have already filed against you. If your dispute does proceed to court instead of settling, it will be to your benefit to have kept receipts, photos, move-in/move-out checklists, and other records of the rental property’s condition at the start and end of the tenancy in question. If the court rules against you, you can face stiff penalties in addition to the withheld security deposit amount, especially if your state takes into account whether the violation was “willful.”
If, on the other hand, you must take legal action against a tenant for unpaid rent or damage to your property that the security deposit will not cover, it can be wise to proceed in small claims court if possible due to the straightforward and expedient nature of those proceedings as compared to civil court. If you have sent a demand letter to the tenant along with a deadline for payment and notice that you will sue, it is advisable to proceed with filing your case only if you have a strong case and sufficient evidence to back up your claims, and if there is a good chance you will be able to find the tenant and actually collect a judgment from them.
Abandoned Personal Property
If a tenant moves out and leaves behind personal property, you may think that you can dispose of it as you please since they appear to have abandoned it. While this can be true in cases of a planned, known move-out date, it can be more complicated in cases involving eviction or when a tenant simply vanishes. State laws vary with regard to what your obligations as a landlord can be under these circumstances, so be sure to confirm any rules you may be subject to before you sell, give away, or otherwise dispose of a tenant’s personal property.