Security deposits are often a confusing aspect of renting property. Laws regarding the allowed amount of the rental deposit, whether interest is paid on the funds, what can be deducted from the deposit, and the time frame within which the deposit must be returned to the tenant varies from state to state. To make certain that your real estate investment policies comply with the laws regarding security deposits, it is imperative that you research the lstate and municple laws governing your rental location.

AMOUNT OF DEPOSIT The amount you can charge for a deposit varies from state to state. Whether you have to hold the funds in an escrow account and/or pay interest on the money is also subject to state law. If any monies have been deducted, an itemized list must accompany the refund. Laws differ, as well, regarding the time frame within which you must return the deposit funds.

CONDITION UPON OCCUPANCY It is extremely important to record the condition of your property by listing any damages or flaws before the tenant moves in. The typical procedures are either to give the tenant a written statement of the condition of the property or to walk through the property with the tenant, write an inventory of any damage findings, and have the tenant sign off on the statement or inventory.

DAMAGE DEDUCTIONS Normal wear and tear is not considered damage, and this is based on the length of time that the tenant ihas inhabited the premises. Walk through the property and make note of anything that is new damage. Take pictures of any damages that you believe should be charged against the deposit. In some states, back rent due may be deducted from the deposit. Again, it is wise to check the laws of your state.

REFUNDS Most states require deposits, minus any deductions, to be refunded within an allotted period of time. Failure to comply with state laws regarding this refund period can result in harsh legal action. If the laws of your state or municipality are breached, you may be subject to a court ruling that can mandate the return of the full damage deposit, regardless if damage beyond normal wear and tear has occurred. You also may be required to pay the tenant additional money in the form of court ruled damages.

Security deposits are an important tool to cover the expense of any damages caused by renters. The laws governing security deposits must be adhered to strictly, as per the specific state’s laws. Whether you own property in one or multiple states, researching your local laws or retaining the advice of a real estate lawyer is the only prudent plan of action to protect yourself, as well as to take full advantage of the laws which benefits you as a property owner. Triumph Property Management protects your interests by remaining compliant with all state and local laws governing security deposits in Nevada.