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Landlord Advice — How to Manage Security Deposit Disputes

As the end of the lease approaches, it’s time to consider the return of the security deposit. If your tenant cared for the property, delivering the deposit refund can be a pretty simple task. However, if they haven’t kept the place up, it can be difficult to navigate the best way forward. Consider the tips below if you encounter a security deposit dispute.

Communicate With Your Tenant Clearly About the Security Deposit Terms and Conditions

More than any other factor, getting clear, concise details to the tenant — written and agreed to in the lease agreement — can save you from worries and even small claims court if a dispute should arise. It’s also a smart idea to include in the lease a request that the tenant have renters insurance while occupying the space, as damage they cause to your unit may not be covered under your policy, though it may be under their own.

Let your tenant know if there is an additional deposit for pets or if any of the deposit is un-refundable.  Stating these conditions up front can help you from having an uncomfortable conversation as the tenant prepares to move out. Delivering these specific details to the tenant in the lease also helps to legally insulate you if pet damage should be uncovered during their stay.

Remember to check in with your tenant regularly while they’re living in your rental and make sure that things are going well. Keeping that landlord-tenant relationship positive and proactive can increase the odds of the tenant taking good care of your place. They’re also more likely to renew their lease, too.

Upon Move-In, Request that the Tenant Complete A Condition Report

This is another excellent way to start off on the right foot with your tenant. By giving them a chance to highlight issues upon move-in, you’ll have a better understanding of their concerns and also an opportunity to address these issues when the tenant hands in their condition report. Request that they send photographs or include them in the report. Lastly, be sure to review these issues inside the rental unit and verify they’re legitimate.

As the Move-Out Date Approaches: Inspect, Identify and Deliver a List of Repairs

If possible, tour the space with your tenant 60 days before the end of the lease and identify any concerns about the condition of the space in their company. You may find they’re more understanding about taking responsibility for the damage. Deliver an itemized list of your findings and reinforce the fact that failure to make timely repairs will result in the loss of some, or all, of their security deposit.

It’s here where you’ll want to pay close attention to state and local laws that govern the requirements when interacting with your tenant about issues such as these. Define a fixed time period (30 days, usually) in which the tenant’s required to respond. If you’ve delivered a list of repairs and the tenant doesn’t respond within 30 days, you may find yourself in a security deposit dispute.

Document Damage With Photos and Written Descriptions after Move-Out

If a problem tenant did not make the necessary repairs to the space after move-out — as defined in the itemized list you provided them — be sure to carefully document damage with photos and written descriptions and deliver these details to them.

You’ll want to get several estimates for the required repairs soon, too. Property management companies follow a strict protocol in circumstances like these, and you should as well. Identify that any unpaid rent and/or the cost of damages that will impact the full return of their security deposit and your efforts to collect on this debt may be pursued by any and all legal means.

The Tenant’s Right To Refute

If damages to the property exceed the total of the security deposit, you may need to seek reimbursement in small claims court. Present to the judge your evidence. Bring those before and after photos, the itemized list of damages, the receipts or invoices for the repairs, the lease and all your related correspondences.

The tenant will have a legal right to refute these claims, but will likewise have to provide compelling evidence that contradicts yours. After the judgement is in and you’ve won the case, be sure you’re following state and local security deposit laws and that all deductions from the security deposit are in accordance with these statues.

Insuring Your Rental Property

Although working through the end of a lease with a difficult tenant can be stressful, your insurance doesn’t have to be. Check in with an American Family Insurance agent to explore our easy-to-understand coverage options. You’ll find peace of mind knowing your finances and your rental properties are carefully insured.

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