How to Avoid Security Deposit Disputes

Property Management

When you rent a property, it’s standard to collect a security deposit.  The purpose of the deposit is to have funds to withhold for tenant-caused damages, and also unpaid rents.  What ends up creating a lot of havoc is when the tenant expects their full security deposit to be returned, and you, the landlord withhold some of those funds, and then have a furious ex-tenant on your hands.  

While not all security deposit disposition issues can be avoided, there are some actions the landlord can take to help minimize the conflict.  

  1.  Know what you can and cannot withhold from the deposit.  Did you know that in the state of Missouri, if you wrongfully withhold something from the security deposit, the tenant may sue to recover up to twice that amount?  Did you know that painting from regular wear and tear cannot be withheld from the deposit? Or wear and tear on carpet? If you end up deducting the full cost of brand new carpet on 10 year old carpet because it’s worn out, you’re probably going to end up going to court with your tenant…and losing.   
  2. Thoroughly document the condition of the property at move in.  You need a written report, photos, and video. Every angle of every room should be able to be looked back upon.  Your tenants should be given the opportunity to conduct a move in report as well, and you should document if they fail to provide one.  Document even if there are no damages at the time, because if a wall gets damaged during the lease, and then you have no proof it wasn’t damaged prior, how will that hold up if it goes to court? 
  3. Outline expectations when the tenant gives notice to move out.  You should have move out instructions and a cleaning checklist for all tenants moving out, that way they know what is expected of them.  
  4. Thoroughly document the condition at move out.  Again, written report, photos, and video. Every angle, every room.  If you need to prove damages later down the road, you’re going to need this.  
  5. If you deduct your own labor expenses, be detailed.  If you are doing the labor at the property, be sure to document this.  Write down what time you started and stopped, what you did, and keep all receipts.  Charge a comparable amount as those in the field in your area. Or, have your property management take care of everything that way there is no worry or discrepancies on this. 
  6. Know the law, and don’t miss deadlines.  In Missouri, you have 30 days to return the security deposit and/or provide an itemized list of what was deducted.  If the tenant fails to provide you with your forwarding address, you will need to mail it to their last known address, which is likely your rental property.  Document all of this, and save the records.  

I hope these tips help the next time your tenant moves out.  If you have questions, call us at 636-707-2000.