Security deposits are one of those expenses a renter expects when they apply for an apartment or a home. They help to cover any damages caused by the renter while also helping the landlord protect some of their property's value.
However, landlords can't just charge whatever they like for a security deposit. They're also limited in what they can use the deposit for and how they store the money until it's either used or returned to the renter.
Here's what new and old landlords need to know about security deposit laws and how to use them best.
Security Deposit Laws
Landlord-tenant law varies from state to state, both on how much you can charge and the return date.
In Georgia, there is no specific limit on the security deposit amount. However, making it too high would make it very difficult to rent out a space and would turn applicants away.
Additionally, landlords must return deposits within a month after a tenant moves out. The exception is if they need to use it for repairs, and the landlord must provide a written list of damages.
Security Deposit Uses
How landlords use a security deposit depends on the state. In Georgia, a landlord can use it to cover unpaid rent, utility bills, and even pet fees. Although a property manager can organize repairs, the security deposit would cover the cost.
Normal wear and tear is not covered by a security deposit. That includes things like minor scuffs on the wall or floor. The expenses must also relate to the tenant's use of the property.
An example is if their pet has torn up the carpet or walls. While a pet fee does cover some of this damage, it may not cover all of it.
Security Deposit Storage Options
Landlords have specific requirements for how they can hold onto security deposits in Georgia. In short, it must be placed into an escrow account in a state or federally-regulated depository. That means it is kept separate from their personal or business funds.
The landlord must notify the tenant of the banking institution's name and address where their deposit is held.
In certain cases, the money can be placed into an interest-bearing account. However, this must be specified in the lease. Even then, it cannot be co-mingled with other funds.
Non-compliance may cause the landlord to find themselves facing legal penalties. This may include being liable to the tenant for damages as well as additional financial penalties.
Get Help Managing Security Deposits
Collecting security deposits is a normal part of being a landlord. Everyone knows to expect one when they apply for a rental, and it helps protect your investment. However, you'll need to make sure you're following your state's laws regarding deposits if you want to avoid legal action from your tenants.
PMI Georgia can help you with any of your property management needs, including managing your security deposit. We're available in the Atlanta area and its surrounding communities. Schedule a consultation today to learn more about our services.
