The Amount of a deposit that needs to be returned is entirely determined by the content of the contract between Landlord and Tenant and the State laws and local jurisdiction. First consideration will be to the contract terms which identifiy specific portions of the deposit that are non-refundable, such as pet cleaning fees.
The part of non-refundable must be identified directly in the lease agreement. If all the deposit is to be kept by you it should be stated as such in the contract (I hope you didn’t write it up as ALL non-refundable – that is pretty rare).
How do I identify Parts of the Rental Contract as non-refundable?
Knowledgable landlords now it’s important that a tenant understand what part of their deposit will be non-refundable. The best process is to have them initial next to the contract the portion that is non-refundable. Specifically stating what it’s for and the amount.
For example: in the lease agreement write something like. Deposit $800 of which $250 is non-refundable for cleaning – have a small blank next to it _____________ and have them initial.
This is only a portion of the deposit explanation; it should further deliniate the breakdown of the requirements to obtain the remainder of the deposit by the tenant.
By this, I mean in addition to having specifically listing the non-refundable you should also reference a list of items if damaged what they will cost. If an item is not on the list and is lost or broken the replacemenet cost should be at least double the actual dollar value of the item. After all, you will have to take the time to buy, replace, or seek a repair person.
Side Note from Editor
Be very specific in your contract if a portion is not refundable
Surprises create disgruntled ex-tenants; disgruntled ex-tenants create lawsuits.
I tell the tenant in writing AND verbally what is not refundable of their deposit.
The most common item is carpet cleaning.
There are some landlords who have a deposit as all non-refundable. But why would you do this? What incentive does your tenant have to toe the line? He/she isn’t getting their deposit back anyway, so I
seriously doubt you will have a clean apartment when they leave.
How Do I Write Up a Cost Sheet For a Lease Agreement?
The cost sheet should be referenced as an addendum to the rental agreement; that way it can be several pages long (if necesssary) listing the cost for replacement, cleaning, or repair
Notes from Editor
This and the Rules sheet are the most over looked pieces of the tenant file.
A cost sheet is what you will charge a tenant for damages. It gives them a clear definition of how much it is going to cost them for nail holes, clogged sinks, unscrubbed toilets, and the like.
Always mark it way up. If I have to call a plumber to fix something they broke I will double the fee. After all, it isn’t just the repair cost that I have to pay for, but my time. I had to look at it, talk about it to someone, arrange for them to make the repair, and let them in and then pay them. I think in all, just that probably took an hour of my time.
Check with your lawyers on what, if any, limitations might exist in your area. Laws change, as of this writing there isn’t a dollar limit in my county – but give it time and I’m sure something will change. Note: an example in the next county over, there was or is limitation regarding furnaces – if one breaks you cannot charge the tenant for it’s repair – it’s the responsibility of the landlord. By and large, I think something like a furnace should be the landlords responsibility. Be sure and delineate that if something is not in working order what your expectations are. If the refrigerator does not work are you going to consider that just something you will have to deal with? I would think so. What if it doesn’t work when the rental is returned back to you?
I have heard of rentals in which the landlord lowered the rent and required that any appliance breakdown was the responsibility of the tenant. I guess that’s okay – but you should probably know the laws in your area. Like I said; a county over if I did not immediately fix a furnace I could be in hot water.
How Quickly Does a Landlord Have to Refund a Deposit
In most cases a deposit must be refunded within 14 days of a tenant legally vacating, however the actual determination is based on county or city ordinances. In some counties and cities the time frame will default to a state guideline.
Side Notes from the Editor
You should know your county, city and states refund deposit regulations.
Where I live we must refund a deposit within 14 days of the tenant vacating. This includes partial refunds.
And any deposit that is kept must be itemized for the tenant and that itemization must be done within 14 days of them vacating. That gets into the importance of having a cost sheet for how much everything will cost them.
Your area may vary, so you need to know the laws. If you hold someone’s deposit unlawfully, they may be entitled to all if it back – or worse yet, some multiple of it.
That might make you kind of cranky if your ex-tenants cost you $700 in repairs but the court awards them triple the deposit you kept if you didn’t do it properly. It may not be fair – but the law isn’t always what’s fair.
Check out the example in the reference section where we have a copy of a lease for educational purposes (always seek the advice of a lawyer).
How Can a Tenant be Refunded a Deposit if Their Address is Unknown?
Knowledgable landlords put verbiage in the contract that the landlord will send any refund or notice of NON-refund to the last known address given by the tenant. It will also state that it’s the tenant’s responsibility to keep the landlord updated with any new address.
Generally a tenant that is expecting a refund will let you know their new address, but one not expecting one might not. In either case, if a tenant is owed a refund and you don’t have their address just call one of their references and ask them to call you.
If however, you are not sending them a refund some states will allow you to send a notice to the tenant and you can keep the returned letter from the post office as proof you sent off the notice in case it comes up in a claim by your tenant. Discuss this with your lawyer as processes can vary from area to area.
Can I give a Refund in Cash?
The question isn’t can you – but should you.
Professional landlords do not give refunds in cash. A proper business needs trackability/accountability and can do so by maintaining records which include checks. Cash has a higher causality of fraud; such as a tenant claiming they did not receive the money – or employees fraudulently keeping cash.
If your tenant does not have a banking account they can still cash the refund check at a money mart or Walmart.