Top 6 Common Mistakes Landlords Make When Handling a Tenant’s Security Deposit
Handling a tenant’s security deposit incorrectly can cost landlords thousands of dollars in legal fees, fines, and repairs. In this video, we break down the six most common security deposit mistakes landlords make and how to avoid them.
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Collecting the wrong security deposit amount
A security deposit is about risk management. In most cases, one month’s rent is sufficient. Higher-risk applicants may require a larger deposit. If the risk is still too high, the application should be denied.
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Allowing the deposit to be paid over time
Security deposits should always be paid in full at lease signing. Allowing installment payments increases landlord risk and reduces financial protection.
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Letting tenants use the deposit to pay rent
A security deposit should never be used for rent or other charges while the tenant is living in the property. Even in the final month, rent must be paid as usual.
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Returning the deposit too quickly
Landlords should wait until the final day allowed by law to process and return a security deposit. In Utah, landlords have up to 30 days to provide an itemized statement and any remaining balance.
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Failing to calculate actual damages
Landlords must calculate real financial damages using invoices, repair estimates, and depreciation when applicable. Deposits cannot be kept arbitrarily.
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Not providing a clear itemized statement
Tenants must receive a clear accounting showing what was deducted from the deposit and why. Itemization helps protect landlords from disputes.
Watch our video Top 7 Red Flags to Watch for When Screening Tenants (link: https://kasteelproperty.com/top-7-red-flags-to-watch-for-when-screening-tenants/) to learn how proper screening prevents most landlord problems.
