Although the average rent for a one-bedroom apartment is around $1,000/month, this isn't always enough for landlords to cover their property-related expenses. In that case, security deposits offer landlords a financial cushion. They serve as an insurance policy against potential damages or unpaid rent.
But before you can collect security deposits, you must provide your tenants with certain information. This helps you avoid legal trouble when it's time to return the money or file an eviction lawsuit.
So, keep reading to discover the key elements of effective security deposit management in Greenville, SC.
1. Security Deposit Limits
There's no limit to how much landlords can charge for a security deposit. Still, the amount has to be reasonable.
For instance, asking for four months' worth of rent for a one-bedroom place with no furniture could be seen as unfair. Most landlords request a security deposit that's about the same as one month's rental fee.
If you're having trouble deciding on an amount, you can use a free rental analysis tool. It measures your property's value so you can choose the appropriate security deposit.
By keeping your security deposit reasonable, you can make it easier for tenants to avoid financial stress. This also makes your property more appealing to prospective renters.
2. Storage of Security Deposits in Greenville, SC Real Estate
Security deposit funds must be kept in a dedicated account, separate from the business's other funds. This provision guarantees landlords don't misuse security deposits.
Escrow accounts are a standard practice in the industry. However, any separate account established by the landlord is an acceptable form of storage. The account must have the word "escrow" or "title" in its name.
Property managers can help landlords store security deposits the right way. Not only does this reduce the time owners spend managing the account, but it also ensures compliance with local laws.
3. Returning Security Deposits and Interest
Landlords must return the security deposit within 30 days of receiving their keys from the renter. If the owner fails to do so, the tenant can recoup up to three times the amount by suing.
Any interest earned on the security deposit during the tenancy must be given to the renter as well. However, landlords can hold onto the interest by disclosing this information in the tenancy agreement.
When it's time to return the money, property management companies can help make the proper deductions and refund tenants what is owed to them.
Best Security Deposit Management Practices for Landlords
Store security deposits separately, return them within 30 days, disclose any interest earned, and adhere to other legal requirements. Failure to comply could make you liable for up to three times the deposit's amount and any attorney fees.
To avoid this, landlords should proactively seek assistance from the professionals at PMI Upstate SC. By partnering with us, you can maintain compliance with the law and foster positive tenant relationships. Contact PMI Upstate SC today to get the professional guidance you're looking for.