We offer two options to our residents for Security Deposits. The first is what we refer to as a traditional deposit. The traditional security deposit is calculated at $200 less than the rent and can increase based on credit. We hold onto the full amount in an escrow account until the resident moves out. Any damages found at the time of move out will be taken out of this deposit.
The second option is our security deposit replacement program (SDRP). This option allows them to pay a monthly fee in lieu of the traditional deposit. They are still responsible for any damages at move out. If they don’t provide us with the money, then the insurance company will transfer us the money within 1-2 weeks and send the resident to collections for the amount owed to them.
How does this benefit you?
Having the option of a Security Deposit Replacement Program (SDRP) benefits you by having lower move-in costs for the resident which means shorter vacancy periods. With the SDRP option, Client’s also have more coverage than with a traditional security deposit.
State law dictates to the industry how to handle traditional security deposits. The deposit belongs to the resident and is legally their property throughout the term of the residency. The only opportunity we have to capture any of the deposit is in the thirty-days immediately after the residency has ended and then only for any unpaid sums or damages that are as state law describes “above and beyond normal wear and tear”.
State law does not allow any property owner to charge any residents any sum for anything that is considered just simple normal wear and tear. For example, that may mean that we cannot charge a former resident for any of the cost of painting the house to make it ready for the next resident. Normal Wear and Tear is best defined as “The inevitable physical decline of the condition of a property from time and usage. Normal wear-and-tear increases over the useful life of any property or asset. It results from normal usage by its occupants as well as from weather and other natural forces that surround it.”
We are committed to ensure that all residents honor all parts of the lease and that they return the property with no damages that would be “above and beyond normal wear and tear”. If there are any maintenance issues or damages that are chargeable to the resident, we will deduct those sums from the deposit before returning any balance to them.
