Are you charging security deposits when a tenant moves in? If not, you could be risking your property and its cash flow.
As a Phoenix, Arizona, landlord, protect yourself and your investment by collecting security deposits as a form of insurance. When you have a bad tenant, you'll be glad you have this security.
You can't collect any amount. You need to know the laws regarding security deposits in the local area. Keep reading to learn them.
How Much Can You Charge for Security Deposits?
States like Arizona limit the amount a landlord can charge as a security deposit. The security deposit amount will depend on the rent amount. You can only require tenants to pay a maximum of 1.5 times the rent amount for a security deposit.
If the rent amount for a unit is $1,000, the maximum security deposit amount is $1,500. Tenants might pay different amounts than others depending on the price of their unit.
You can also choose to charge a pet deposit, as long as the pet isn't an emotional support or service animal. These pet owners are protected under the Federal Fair Housing Act.
Security Deposit Deductions
Security deposits can protect landlords from tenants who damage the property or fail to pay rent. Under Arizona security deposit laws, landlords can deduct charges (within reason) from the security deposit once the lease agreement ends.
When the tenant moves out, the landlord can use the security deposit to cover:
- Nonpayment of rent
- Nonrefundable fees or deposits
- Damages and property maintenance
You cannot charge for normal wear and tear. The tenant must have failed to properly maintain the property for you to deduct the cost of damages from the security deposit.
On your lease agreement, you can decide to keep the security deposit of evicted tenants.
Security Deposit Returns
The best landlord advice is to follow all of the local regulations when it comes to security deposits in Phoenix. This includes handling security deposit returns in a specific way.
Landlords must return the security deposit within 14 days of the lease termination. You can send the security deposit to the tenant's new address via first-class mail.
If you fail to return the security deposit in time, you forfeit your rights to the funds. A tenant can then recover the withheld amount. You might be subjected to paying a penalty of twice the amount of the deposit as well.
A property management company can handle the returns for you so you don't have to worry about noncompliance.
If you make deductions to the security deposit amount, you'll send an itemized list with the remaining security deposit funds. The tenant can dispute the deductions from the security deposit within 60 days of receiving it.
Can Property Management Help?
When it comes to protecting your rental property, a property management company can help with various tasks. They know the local laws and can collect, store, and return security deposits based on the laws.
At PMI Phoenix Metro, we look forward to being your partner for all things real estate. With our 20 years of experience in Phoenix, Arizona, we can increase the value of your assets on a local level.
Contact us today for help with security deposits and other essential property management duties.
