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Guidelines for keeping and returning a security deposit

The return of a security deposit is one of the most common landlord-tenant disputes. This payment can keep your tenants from costing you extra in repairs.

However, if it's not handled correctly, it could also result in a lawsuit against you. Here are a few guidelines to help you know when you can keep a security deposit and when a tenant needs it back.

Assessing the damage

Once the tenant has returned the keys and left the premises, you should begin to assess the property. Scheduling to have the tenant present for your final walk-through of the property will help save you time by minimizing the chance of a dispute.

Prior to the walk-through, be prepared to write a list detailing the property's condition. Deductions may be required for:

  • Cleaning
  • Significant damage repairs
  • Unpaid rent

To keep these costs clear to the tenant, you should write down each repair and the approximate cost to fix it.

Proving it

Common reasons why a tenant may dispute their security deposit being used for a repair is if they claim the damage was already there or they had notified the leasing office of the damage. Proper record keeping can help avoid these issues.

Give new tenants an inventory checklist when they first move in so that you have a record of the condition of the property prior to their tenancy. You can also take pictures of the property before the tenant moves in. Compare the condition of the property from the start to the end of the tenancy using these records. You should also be sure to keep a record of any maintenance complaints made and whether they were resolved.

To prove the cost of repairs and cleaning, secure a reasonable estimate for the job and then provide the receipts afterward.

Return within a reasonable time

New York law mandates that a security deposit is returned to a tenant between 21 and 45 days following the tenant's move-out date.

If the tenant sues

A tenant who claims not to have received their security deposit within a reasonable amount of time or who disagrees with the deductions made from their deposit may choose to take legal action against you.

In small claims court, you could owe up to $5,000 to the tenant, whereas in village and justice courts you could owe up to $3,000. In addition to paying these amounts and losing the deposit, you could also face penalties or punitive damages in some circumstances.

If you are facing accusations such as these, contact an attorney to learn more about your rights. A real estate lawyer can help you with litigation cases such as these or advise you on language to use in the lease to keep the condition of your property maintained.

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