Agent's Perspective - Security Deposits and Last Month's Rent


Most landlords require that tenants put up some money before moving in. Security deposits and last month’s rent payments can add up to a significant amount of money. From the landlord’s perspective, it is advantageous to collect as much as possible upfront to protect themselves against uncollected rent and/or costs of repairs. The tenant, however, is usually hoping to pay as little as possible out of pocket to move into a new rental home. Most often a tenant not only has to pay rent where they are currently living, but must also come up with the expenses for the new rental: first month’s rent, a security deposit, and sometimes last month’s rent. 
 
It can be a very expensive proposition for a tenant to make a move. If the tenant has a security deposit from the old residence due to him, it is imperative that the tenant do what is necessary to get the deposit refunded. This can help offset some of the costs for the transition from one place to the next. 
 
The landlord has up to three weeks (21 days) to do one of the following two things: 1) return the security deposit to the tenant in full, or 2) give the tenant, personally or by first-class mail, an “itemized statement” in writing saying why he is retaining part or all of the deposit. To avoid any misunderstandings, it is always a good idea to do a “walk through” with the landlord prior to occupying a new rental. This way it is clear as to the overall condition of the premises. Tenants should have a written checklist when they move in and when it is time to move out. After the tenant has moved out cleaned up the property, he can ask to meet again with the landlord to review the checklist and compare the overall condition. 
 
Let’s say a two-bedroom rental in today’s market is $3,000+ dollars per month. The property owner may want a similar amount of $3,000 or more for a security deposit. The tenant may feel this is high and excessive, but in reality, it is not. You have to consider that the property owner has monthly expenses that include mortgage payments, property taxes, insurance, utilities and maintenance costs. The owners have a huge financial commitment. The cost of replacing carpets, refinishing hardwood floors, or other repairs that require a professional tradesperson can easily be higher than the security deposit amount. Most landlords that we know are not interested in withholding any of the tenant’s security deposit; they just hope to have their property returned to them in good condition. 
 
A landlord must return the deposit if the rental property is in the same condition as when it was first rented. The landlord cannot withhold money for items that are considered “normal wear and tear”. However, a landlord can withhold part or all of the security deposit to make repairs for damage caused by the tenant. A landlord may also withhold the security deposit to remedy defaults in the payment of rent. A security deposit is not the last month’s rent and cannot be used in lieu of the last month’s rent by the tenant. 
 
It is always best when both tenant and landlord have everything in writing and are clear on their respective rights and obligations to each other. Mutual respect is the best policy.