Reduce Your Liability: The Ins and Outs of Returning Security Deposits to your Houston Tenants

5 years ago

With all the work that comes with a tenant leaving, trying to take care of every detail can be hard. Still, for Houston property owners, keeping records of those details is necessary, especially in relation to refunding a former renter’s security deposit. Mishandling the security deposit refund could lead to expensive and needless legal battles depending on where your rental property is located. Understanding the best practices for returning security deposits can aid you in meeting your obligations as a landlord while also making certain you prevent unwanted legal issues.

A security deposit is not income. The deposit includes funds kept for your tenant (which means it is their money); you should never spend this deposit or make use of it while the renter is still staying at your property. Your lease should be written in clear and specific language that describes the specific situations where all or part of the security deposit will or will not be refunded. The top causes to retain portions of a tenant’s security deposit include recovering past-due rent, damage to the property (above ordinary wear and tear), unpaid utilities, or removing abandoned personal items. The amount you can keep and for what reasons are contingent on local and state laws so you should make sure that you clearly understand the regulations in your area.

In the same way, each state has a timeline for returning security deposits to previous renters. The timeframe can be different in every place but it generally ranges from 14 to 60 days beginning on the day the tenant relinquishes their occupation of the home. Failing to return a security deposit and any related documentation of amounts withheld by the required deadline may result in a number of consequences, such as:

losing the right to deduct any portion of the deposit for damages or unpaid rent
facing a lawsuit in small claims court
other monetary penalties allowed by local or state law (e.g., owner to pay 3 times the deposit)

When partially or fully refunding a security deposit, you need to include a statement detailing the refund and use a check for a clear paper trail. If you have withheld however much of the deposit, you may also be asked to send receipts denoting the amounts withheld and the cause for each one. Creating and sending clear documentation is a landlord’s greatest safeguard against any complaints of mishandling a security deposit.

Understanding the complexities of returning a security deposit is a vital element of successful Houston property management, but so is keeping the right people on your team. Real Property Management Avitus can administer all the particular details for you including streamlining your move-out process, security deposit refunds, and ensuring you and your property stay clear of legal trouble. If you would like to know more, contact us online or give us a call at 281-570-6357 today.