Security deposits are an important aspect of managing a rental property. As a property owner, it’s crucial to handle security deposits effectively to avoid any legal or financial issues. Here are some tips to help you handle security deposits like a pro:
- 🔍 Understand the law: In addition to the state law that may be governing security deposits, there could also exist local laws. E.g., in Chicago we have Residential Landlord and Tenant Ordinance (RLTO), and Cook County, IL has its own Residential Tenant Landlord Ordinance (RTLO). They set the interest rate and the maximum amount that can be charged, when it must be returned, and how it must be stored. Make sure you understand the laws in your state and follow them accordingly.
- 📸 Document the condition of the property: Before a tenant moves in, conduct a thorough inspection of the property and document its condition. Take photos or videos, and make note of any damages or necessary repairs. This will help you determine any deductions from the security deposit when the tenant moves out.
- 💰 Keep security deposits separate: It’s important to keep security deposits in a separate account, apart from your personal or business accounts. This will help you avoid commingling funds and ensure that the deposit is available when the tenant moves out.
- 📝 Provide a receipt: When holding a security deposits, make sure that you provide tenants with timely receipts for the security deposits you hold. Also, make sure that the receipt includes all information required by the law.
- 👀 Provide a detailed move-out inspection: When a tenant moves out, conduct another thorough inspection of the property and document any damages or necessary repairs. Provide the tenant with a timely and detailed report of any deductions from the security deposit and return the remaining balance promptly.
By following these tips, you can handle security deposits effectively and maintain a positive relationship with your tenants. If you need help managing your rental property or have any questions, don’t hesitate to reach out to us.
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