Property Management Blog
How quickly should I return a security deposit?
For the latter request, the answer is simply a firm "no!" NEVER return the deposit or even give an indication that the tenant will get their deposit back until after they've completely vacated, handed over the keys, and you've inspected the property for damage.
But what about if the tenant just wants the deposit quickly? Should you agree to that? For several reasons, we advise against it. The law in both states where we operate allows a landlord up to 30 days to return a security deposit. While we don't recommend using all of that time, we do recommend not rushing it. We generally tell tenants that we usually get their deposit processed (not refunded, as we'll get to in a moment) within a week or two, but that it could possibly take up to 30 days. This puts the tenant in the right frame of mind that they shouldn't be hassling us a few days after moving out.
So why should you not rush it to make the tenant happy? Let's remember the purpose of the security deposit. The deposit is there to cover any damage to the property or any amounts that the tenant still owes you on move-out. We see landlords frequently forget items when they're actually conducting the move-out inspection (such as re-keying, carpet cleaning, etc.), and then they remember a day or two later. If they've already given the tenant the deposit back, too late! That tenant isn't going to give you money then, no matter how much you're owed it. You want to take your time and make sure you thoroughly review the condition of the property, the move-in inspection, and the terms of the lease. You don't want to miss anything.
Also, you simply have a life of your own to live, and you don't want to commit to a quick turnaround on the deposit. If you promise that up front, and then life gets in the way and you need a few more days, the tenant is going to be hassling you non-stop. Once you've told them that you'll give them a speedy refund, they're going to make plans for the money based on that. So don't promise it. Make them arrange their finances around a reasonable timeline rather than you arranging your schedule around their finances. There's a reason that the law gives you up to 30 days. Lawmakers don't think it's reasonable for you to have to immediately cut a check, so you shouldn't either.
And this gets us to the most important part: there is NO guarantee that the tenant is getting their deposit back in the first place. You should NEVER tell the tenant that they'll be getting a check on ANY date. What you should tell them is that you will "process" the security deposit in a certain time frame. Processing it could mean a refund, or it could mean that they lose their entire deposit and still owe you even more money. Or it could mean a partial refund. It all depends on what the condition of the property is and what they owe you. You don't ever want to give the tenant the impression that getting their deposit back in full (or even in part) is a foregone conclusion. They need to always be under the impression that getting their deposit back is entirely dependent upon them returning the property to you in the same or better condition than they got it, serving out the full term of their lease, and owing you no rent, late fees, or other amounts.
Security deposits are some of the biggest problem areas for do-it-yourself landlords. So if you don't want to deal with these issues, give us a call and let us take the worries off your hands!