When you hand over the keys to your property, you are probably giving a virtual stranger access to your most valuable investment. That investment represents your future financial security, so you need to ensure it's in safe hands.
That's why a security deposit is an essential step when securing a new tenant. It's there as a financial cushion in case things go wrong. Read on for our guide on handling security deposits in Bothell, WA.
There Are No Legal Caps on Deposits
Some US states have strict rules on the maximum security deposit you can request. However, in Bothell, WA, no such caps exist. Nevertheless, you could put off potential tenants by asking for too much.
Most landlords request one month's rent as a security deposit on a property, so it's wise to follow this figure as your guide.
You Can Charge Fees
When you ask for a security deposit, you're asking for a refundable amount for the property. However, you can also add non-refundable fees to that security deposit.
These fees are helpful if you expect to incur specific costs, like cleaning fees if your tenant has a pet. When charging fees, make sure it's evident in the lease agreement that they're separate from the security deposit.
Landlord Responsibilities: Proof of Payment
When tenants pay you for the security deposit, you must issue proof of payment. So always provide a receipt.
To help protect your property, you should also include documentation to show the property's condition when you handed it over to the tenant. That is useful later on if you want to make deductions for property damage.
Security Deposit Regulations for Bank Accounts
Putting security deposits in your personal bank account can be risky because you could accidentally spend money that, by rights, belongs to your tenant.
In Washington, they've addressed this problem by creating a law about bank accounts for deposits. You must hold a tenant's security deposit in a trust account and use a financial institute within Washington state.
You Must Cite Valid Reasons for Withholding a Deposit
There will be times when you want to keep some of your tenant's security deposit, such as when they've left the property with damage or haven't paid their rent.
However, it's important to remember that you have to cite valid legal reasons for withholding deposits and must always act within the law.
You Have a Deadline for Returning a Deposit
When a tenant's lease ends, you have twenty-one days to return the deposit. However, this should give you ample time to inspect the property for damage.
Twenty-one days is also a reasonable timescale for tenants, meaning they don't have to wait too long before getting their money back.
Security Deposits: Knowing the Law and Protecting Your Investment
Never forget that security deposits are a tool to protect your real estate investment. However, that money is not a permanent payment, so always abide by the law when taking and returning deposits.
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