'Tis the $eason to Return Tenants' $ecurity Deposits..Do it like a PRO

By
Property Manager with Gibson Management Group, Ltd.

‘Tis the season to return security deposits and while many DIY landlords cringe at the thought of their departing residents not agreeing with their depo$it return, professional property managers have “tips” for doing it RIGHT.

NUMBER 1:  Whether your business is an LLC or a corporation, name your attorney as the “registered agent” with your state corporation department. When looking for the proper person to serve court documents on, state web sites are the first stop.  If the registered agent is an attorney it tells the plaintiff/tenant 2 things...1) since the registered agent is an attorney, their suit probably won’t go forward in Small Claims Court; and 2) that their landlord/property manager will be represented by an attorney....both good.

 

NUMBER 2: Have the departing residents provide their forwarding address to you on a size #10 business envelope...the only 2 times in the last decade that I have had to stop payment on a deposit return check, the tenant gave the WRONG forwarding address to me.  If they have to provide it themselves, there is no argument that it is their fault and I take a 20% service charge (allowed in my lease) for the process of stopping payment and reissuing a security deposit check.

 

NUMBER 3: Most states require an itemization of the deductions from the security deposit and while there are trade association (LAZY) forms available, I have my own form called 

 

MOVE OUT CLOSING STATEMENT * 2014 * Offer in Compromise

 

on which I itemize the deductions for CLEANING, YARD, REPAIRS, DELINQUENT RENT, LATE FEES, NSF FEES, NOTICE FEES and my 20% SERVICE CHARGE allowed in my lease.  At the bottom of the form, under my signature is the following:   

 

This check/statement is tendered as an offer in compromise for the settlement and return of the security deposit held on the Tenant/Payee’s tenancy.  This offer does not waive, relinquish or diminish the right of the Agent or Property Owner to seek additional monies should the Tenant/Payee reject this offer in any way including but not limited to the filing any legal action with regard to Tenant/Payee’s tenancy.

 

THIS WORDING is an Offer in Compromise meaning the departing tenant takes the check and cashes it or they HOLD the check UNCA$HED and sue me which brings them to NUMBER 1....and probably gets you a 1-STAR review on Google or Yelp.....don't worry, would-be clients will see that you will protect their property when you manage it and know that you are a PRO!

Posted by

Wallace S. Gibson is a Certified Property Manager with over 50 years of property management experience and expertise.  She maintains a specialized property management business in Central Virginia serving Albemarle, Greene, Fluvanna and Louisa counties  

LandlordWhisperer

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"...to be a Virginian, either by Birth, Marriage, Adoption, or even on one's Mother's side, is an Introduction to any State in the Union, a Passport to any Foreign Country, and a Benediction from the Almighty God...." Anonymous

 

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Rainmaker
1,610,491
Sandy Padula and Norm Padula, JD, GRI
HomeSmart Realty West & Lend Smart Mortgage, Llc. - Carlsbad, CA
Presence, Persistence & Perseverance

Wallace: To the point; and the record keeping must be current and concise with all receipts, however small with notes detailing the reason for the deductions and course of work with who completed it.

Aug 23, 2014 12:07 AM #3
Rainmaker
1,276,394
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

In VA....we don't need to provide receipts, etc. like CA...I have extensive move-out instructions and even provide perferred vendor recommendations.....so one-page itemization is all I need and testimony in court about "business records' I don't need the repairmen there.

Aug 23, 2014 12:29 AM #4
Rainmaker
417,264
Debbie Malone
Londeree's Real Estate & Property Management - Lynchburg, VA
From Lynchburg To The Lake (434) 546-0369

Good Mornin Wallace, I'm going to suggest to my husband that we name our attorney as our registered agent. Excellent advice.

Aug 23, 2014 12:44 AM #5
Rainmaker
4,069,422
Dorie Dillard CRS GRI ABR
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good morning Wallace,

You are the pro..I can see why so many want you to manage their properties!

Aug 23, 2014 12:44 AM #6
Ambassador
4,392,012
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Wallace

As always you have demonstrated your expertise in the property management field. I suspect there are many who do not follow the rules for their particular states, especially those who are not property managers.

Jeff

Aug 23, 2014 01:24 AM #7
Rainmaker
813,243
Jeff Pearl
RE/MAX Distinctive / LIC in VA - Lovettsville, VA
Full Service Full Time Realtor

I always worry about owners trying to solve problems for tenants on their own, and dealing directly with tenants on security deposit issues. I know several agents that just won't do rentals/leases. It definately takes a professional like yourself to handle the many situations that can arise.

Aug 23, 2014 01:59 AM #8
Rainmaker
1,276,394
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

In today's suit-happy society, it is important to use all the means at our disposal to assist our clients....if keeping out of court helps us help them, I'm all for it!

Aug 23, 2014 07:03 AM #9
Rainmaker
1,561,913
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

The security deposit is explained in the rental agreement I use.  The return is also.  There is a provision that it's the Landlord's take on the condition of the place at move out.  I love that!

Aug 23, 2014 08:04 AM #10
Rainmaker
700,622
Bill Reddington
Re/max By The Sea - Destin, FL
Destin Florida Real Estate

The rules for tenant and property is very well spelled out by the State of Florida in regards to security and cure. Really a no brainer.

Aug 23, 2014 11:36 AM #11
Rainmaker
1,276,394
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

My point is that the landlord-tenant laws can be AUGMENTED to the benefit of the landlord/property manager by avoiding the potential for a lawsuit.

Aug 23, 2014 11:55 AM #12
Rainmaker
1,317,857
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

This is good information for those who have tenants who are moving out and how to handle the deposit.

Aug 23, 2014 01:06 PM #13
Ambassador
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Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Wallace, it's a season for new leases for sure! And yes, landlords must do their due diligence.

Aug 23, 2014 02:32 PM #14
Rainmaker
2,433,224
Evelyn Johnston
Friends & Neighbors Real Estate - Elkhart, IN
The People You Know, Like and Trust!

Wallace, you are the epitome of a professional. If I had investment property in your area, you would already be managing it.

Aug 23, 2014 04:18 PM #15
Rainmaker
2,934,869
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Sometimes doing the right thing means not just taking something for the sake of it and I admire returning the security deposits :

Aug 23, 2014 04:25 PM #16
Rainmaker
4,433,283
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Wallace, thank you for the great tips. You are the property management expert on active rain.

Aug 23, 2014 08:07 PM #18
Rainer
1,756,848
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Hi Wallace.  You should write a book.  I would be the first buyer.

Aug 23, 2014 08:31 PM #19
Rainmaker
2,379,091
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning Wallace. Your post is excellent and a well deserved feature. Your clients are very fortunate to be represented by someone as knowledgeable as you are.

Aug 23, 2014 09:00 PM #20
Rainmaker
1,702,447
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker, Blackstone Realty Group - brokered by eXp Realty - Kalispell, MT
The House Kat

Excellent information that I, as non-property manager, wouldn't have known. Thanks for sharing.

Aug 23, 2014 11:33 PM #21
Rainmaker
2,590,904
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

In the world of property management...they celebrate Wallace day

Aug 23, 2014 11:53 PM #22
Rainmaker
1,276,394
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

Acting within state and local landlord-tenant laws is a "given"; however, there can be ancillary policies and practices in place to enhance the odds against being sued...not everyone gets "Judge Judy" or "Judge Alex".....

Aug 24, 2014 08:02 PM #23
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