Q: What is the purpose of a security deposit?
A: These funds are deposited to ensure that the resident abides by the terms of the rental agreement. There are a variety of restrictions on handling the resident's security deposit.

As an investor, you must realize situations happen and prepare yourself for the possibility that if the resident damages the property, the deposit doesn't always cover the entire cost to repair it nor should the deposit be used to "improve" the property. We do make the attempt to collect any shortages that we justify as reasonable.

Careful screening and choosing from a large pool of applicants is your primary protection. Surveys indicate that "how the security deposit is administered" is an important element of responsible management.

Q: How is the money handled?
A: The security deposit is accepted as part of the move-in monies before the resident takes possession of the property. It is placed in a tenant trust account and is normally not used to operate your property. After move-out, any deposit that was not needed for cleaning, repairs or to pay delinquent rent is returned to the resident.

A complete accounting of reasonable deductions from this deposit must be documented and available to the resident within 21 days after move-out. It is important to properly account for tenant monies to avoid liability.