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Are you a landlord wondering about the importance of security deposits? Have you ever considered the consequences of not asking tenants for one?
Security deposits play a pivotal role for landlords. After all, neglecting to secure one can expose you to various risks, including financial instability and property damage. Nonetheless, there are key considerations to remember before determining the deposit amount.
Are you interested in knowing what they are? Keep reading to gain valuable insights into protecting your investment property in Beaufort, SC.
It Should Equal One Months' Rent
The first thing to know about security deposits in Beaufort, SC, is that they should total at least one month's rent. Some landlords request two months' rent; however, asking for more is not recommended. Asking for too much security deposit means you risk your tenants seeking accommodation elsewhere for less.
Security deposits are meant to protect landlords from financial loss and property damage. Other considerations landlords should make when setting security deposit amounts are:
- The property's location and condition: A property with a high return on investment (ROI) will likely warrant a higher security deposit
- The tenant's credit and rental history: A tenant with poor credit or a history of not paying rent on time is more likely to damage a property
- The number of tenants: A property with multiple tenants will likely require a higher security deposit, as there is a greater risk of damage
It Needs to Be Kept in an Interest Bearing Bank Account
Next, the security deposit must be kept in an interest bearing bank account. Some states require the account to have an interest rate equal to or greater than a basic savings account at the same institution. This interest and the security deposit must be returned to the tenant minus any deductions.
You Cannot Use It For Just Anything
Finally, knowing what you can and cannot use a security deposit for is essential as a landlord. A landlord can use a security deposit for unpaid rent, property damage, and a cleaning fee. However, landlords cannot use security deposits for everyday wear and tear or to upgrade the property.
Security Deposit Refund
In Beaufort, SC, landlords are legally required to return security deposits to tenants within 30 days of the tenant's move-out.
If a landlord fails to return the security deposit, the tenant may file a lawsuit against the landlord. Tenants will file this in small claims court.
The courts may award the tenant damages equal to the security deposit amount, interest, and court costs. In addition, the landlord may be subject to criminal penalties for violating the law.
Protect Your Investments With the Right Security Deposits
Security deposits are vital to the rental process for both landlords and tenants. In Beaufort, SC, landlords are legally entitled to collect a deposit from tenants and need to know a few key things about them.
Security deposits should equal one month's rent and be kept in an interest bearing bank account. Finally, landlords must know what they can and cannot use the deposit for.
Discover the unparalleled service and expert knowledge of property management with Stinger Home Management. Contact us today to experience our core values of integrity and accountability. Let us help you achieve your property management goals.
