The country has seen around 83,000 eviction filings in the past month alone.
If you're a Knoxville landlord, you never want to be part of a statistic like the one above. The eviction process is long, drawn out, and a major source of stress for landlords everywhere. Fortunately, there are a few useful measures you can take to avoid evictions.
One is to screen all of your tenants to ensure they'll pay rent and care for your investment property. Another is to collect security deposits from all of your tenants.
In today's post, we'll explain how security deposits work. Keep reading and you'll be able to take preemptive measures to protect your rental property.
What Are Security Deposits?
Security deposits are a form of insurance against damaging tenant actions. When you accept a tenant into your rental property, you're always at risk of missed rent payments or costly property damage. The security deposit gives you protection against these things.
You'll typically collect the security deposit at the same time you perform a rental property inspection. The move-in inspection involves taking a close look at the property to determine if there's any existing damage.
Inspections are there to protect tenant rights while holding them accountable. If there's any new damage at the end of the tenancy, it's presumed to have been caused by the tenant. The landlord pays for the damage with some or all of the security deposit.
Security Deposit Laws in Tennessee
Every state has laws around security deposits. In Tennessee, there's no maximum amount that landlords can request for a security deposit. That being said, making your security deposits prohibitively expensive will drive away perfectly good tenants.
Ask for the equivalent of 1-2 months' rent for a security deposit and most tenants will happily oblige. Another Tennessee law states that you must place the security deposit in a separate bank account so that you don't mix it with personal funds.
Returning and Withholding Security Deposits
When it comes to deductions, landlords may only deduct from the security deposit to cover unpaid rent and property damage. Whatever amount you're returning to the tenant must be within 30 days of the end of the tenancy.
This is where it's important to understand the difference between normal wear and property damage. Rental properties go through more wear and tear than owner-occupied homes. You can't expect tenants to pay for things like faded carpet or nails in the walls.
Property damage involves more specific repairs, like large holes in the walls, damaged appliances, or broken windows. Always make sure to keep receipts for the security deposit deductions. You'll need this evidence if a tenant decides to dispute your claims.
How Rental Management Can Help
Security deposits are there to help you protect your property. They can provide peace of mind and deter poor tenant actions. If you need to withhold from the security deposit, however, it can create a contentious situation.
You can avoid conflict by hiring rental management to deal with it. A good property manager, like PMI Knoxville, can handle everything from security deposits to tenant screening. Contact us today to learn more about our services and how they can make being a landlord easier.
