Information you need to know!

It goes without saying that collecting security deposits when leasing rental property is a must, but as a Real-estate professional working in the age of Covid19 collecting security deposits online is really the best option. 

Of course, before you start collecting security deposits, it is prudent to check your state’s local landlord-tenant law. Some states set specific limits on the size of security deposits and other states do not (see state limits). Other factors to consider is how to hold and account for a security deposit. State laws vary throughout the country on how you can hold security deposits and you may or may not be required to keep the deposit in an interest-bearing account and provide the tenant any accrued interest upon return of their deposit in part or in whole (use our calculator). Many savvy Real-estate professionals also set up separate bank accounts specifically for security deposits to help with accounting. 

A security deposit and first month’s rent are usually the first payments tenants make during the leasing process. The amount of the deposit and rental price should be clearly stated on any advertising for a vacancy and included in the application and lease agreement. The security deposit and first month’s rent should be collected after signing the lease but before allowing tenants to take possession of the property. It is always best to collect these amounts separately (ie: separate checks, payments or receipts) as opposed to one lump sum to further distinguish the accounting for both payments. It is also a good practice to ensure that the funds are available in your bank account before turning over any keys and allowing the tenant to take occupancy of the property. 

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