When we talk about security deposits, it’s important to balance tenant expectations against the possible damage that is done to the property. Tenants will want to get their deposits back, but owners may hang onto some of that money to pay for necessary repairs, cleanings, or unpaid rent and utilities.
What is a Security Deposit? Normal Wear and Tear vs. Damage
First, you have to consider normal wear and tear versus damage. This is a big issue, especially when an owner or investor is going to move back into the property after renting it out. It will no longer be an investment; the owners want to live there. Their expectations of what the property should look like will be a lot different than the expectations of how it should look when it’s rent ready and prepared for the next tenant. For example, we had owners who were going to move back in after renting it for two years. A husband and wife owned the home, and when they moved out, they approved a family of five with two dogs. The wear and tear of that family and their dogs will be much different from the wear and tear that comes from a husband and wife living there with no pets. So, when you’re approving tenants, remember that you’re approving their wear and tear and not your own.
Security Deposit Disposition: What to Deduct
Also keep in mind that you should only deduct for what’s necessary. If your tenant cleaned the property before moving out, and you found ants or cobwebs or little things like that, it’s probably not worth it to withhold money from the deposit. Things you would withhold for include rent that wasn’t paid and utilities. If there was a final water reading or utility bill that didn’t get paid by the tenant, you can use the security deposit for that.
Security Deposit Laws
In the state of Maryland, you have 45 days to return the security deposit or a detailed description of why you’re keeping some or all of the deposit. Send this by certified mail so you can track that it was sent and received in the timeframe required by Maryland. You can’t just say you’ll deduct a certain amount. Don’t tell the tenant you’re withholding $500 for landscaping charges. You need paid invoices that demonstrate the work was done. If there are stains to the carpet and it’s five years old, the tenant is not responsible for the full cost of carpet. You must include depreciation. This also extends to the age of a washer and dryer, and other inclusions. Keep those things in mind as you start adding up the deductions.