To date, the security deposit amounts that we have collected upon tenant move ins have been more than the costs to put a property right again from any tenant damages that we have encountered so far.
For the most part we only see minor tenant damage. Remember, we have an evolved tenant screening system and getting your property a good tenant in the first place, is step one to protecting it. We find that tenants with excellent credit, great credit history often cause very little damage. And we don’t expect to see property damage that exceeds the security deposit.
In the Philadelphia Rental Property Market, and also in most every rental property market, tenants should expect a property management company to collect:
- A security deposit equal to one month’s rent.
- Last month’s rent, also equal to one month’s rent.
The amounts a property management company or a landlord property owner is allowed to collect is regulated by the state. The above amounts represent the maximum amounts we are allowed to collect from our tenants. In virtually every case, the above amounts are what we collect from tenants to protect your property.
These amounts are held by Grow Property Management and are held as mandated by the State of Pennsylvania. We are required to escrow these amounts, and they can not be Commingled (mixed with other money types) or Converted (used/borrowed/ect) in anyway. The State takes these monies very seriously, as they should. And so does Grow Property Management.
The Last Month’s rent is applied as the tenant’s last month’s rent for the property. These monies are designated to be used as “rental income”.
Even though we hold the security deposit, it legally belongs to the tenant. We hold those funds in an escrow account in anticipation to return these funds back to the tenant when they vacate the property.
But we hold the security deposit to protect the property owners against any damages or unpaid rents. Legally we are restricted on the amount of a security deposit we can hold or charge a tenant for damage.
And the landlord cannot increase a security deposit even though the monthly rent is increased.
The Security Deposit is exclusively to be used for any damage to the rental property, that exceeds “Normal Wear & Tear”. Normal Wear & Tear can be a legal term. So we don’t charge the tenant for things like normal carpet wear or small nail holes where art was hung. We might charge the tenant for larger holes or carpet stains. The Security Deposit can not be used as rent; but we can keep the security deposit, for the property owner, if the tenant has outstanding rent. We can also withhold the security deposit for a breach of the lease.
Again, the State takes tenant rights very seriously and so do we. Not only do we agree with the State; but we also need to negate liability for our property owners and also for our company. If a property owners is found to be in failure of compliance to statutes involving tenancy, the tenant is entitled to double the security deposit amount and any interest it may have earned in an escrow account.
The State requires us to return the amounts of the deposit that the tenant is getting back with in 30 days of the lease termination. We also have to give the tenant a detailed description of each item we had to deduct. We usually provide photos. These items have to be reasonable. In other words we can not charge a tenant for being rude. For example, say a tenant left a dirty diaper in the middle of the floor (thankfully this has never happened!) we can not charge the tenant for the insult of this. We can only charge the tenant a reasonable cost of what it would cost to dispose of this. If the tenant fails to provide us with a forwarding address, all liability for the property owner is avoided.
Should a leaving tenant’s damage exceed the security deposit, the tenant is billed they amounts.