Owning rental properties comes with inevitable wear and tear and sometimes property damages. That's why collecting security deposits from new tenants is always an advantage.
Yet, there are state laws and regulations regarding security deposits that landlords need to know about.
Protecting your property doesn't stop with asking for security deposits. It involves knowing how much to charge and when you need to return them.
Staying compliant as an investment property owner is key. Keep reading to learn more.
State Laws and Security Deposits
State laws can regulate how landlords handle tenant security deposits. Some states require landlords to deposit security deposits in an interest-bearing account, while others limit security deposit amounts.
For example, Louisiana does not limit how much a landlord can charge for a security deposit.
It's common for landlords to charge up to two months' rent as a security deposit. Landlords might require higher security deposits to offset potential tenant risks, for instance, bad credit tenants.
Louisiana state law does, however, limit when a landlord must return the security deposit. Landlords have to provide tenants with their deposit one month after they move out.
There are circumstances where the landlord doesn't have to return the security deposit or can take certain fees from the deposit amount.
Returning Security Deposits
Tenants in Louisiana should receive their security deposit within the month after they move out. However, tenants must give landlords a 30-day written notice so that the landlord can prepare for a new tenant and release the security deposit in time.
If a tenant fails to notify the landlord that they are moving, the security deposit might be late.
Tenants will collect their full security deposits if they follow their lease. This often includes cleaning, repairing damages, and completing a move-out inspection.
If the apartment is dirty or damaged, a landlord can use the security deposit to cover the cost of repairs.
Because handling and returning security deposits can be a lot for investors, property management companies exist to help.
Security Deposit Deductions
Landlords can make deductions from a security deposit in some circumstances, but they have to provide the tenant with an itemized list of deductions.
The itemized list should include every deduction made. These are common deductions that landlords can make:
- Property damage
- Unpaid rent
- Unpaid utility bills
- Professional cleaning
It's important for landlords to provide evidence of these deductions to avoid being sued by the tenant in small claims court. Normal wear and tear cannot be deducted from a security deposit, according to state laws.
Landlords also must provide any accrued interest from the security deposit to the moving-out tenant. Hiring a property manager to handle this task can leave owners with more time for real estate investing.
How Property Management Services Can Help
Property management services can hook you up with a professional property manager who understands the Louisiana laws regarding security deposits.
To stay compliant and avoid tenant-landlord complications, consider hiring a property management company to handle security deposits and other day-to-day responsibilities that come with owning a rental property.
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