Rent Deposit Return

[Gustavo Gonzalez]

Good afternoon all: I have a property that has been recently vacated by a tenant who has been in the property for 9 years. I purchased the property 4 years ago with a tenant in it (section 8). At the time of the home purchase, the deposit was not transferred to me due to prior arrangement by the previous owner and tenant. It seems like they had worked out a system where if the tenant was not on time with the rent, it would be deducted from the deposit. So, I collected a rent deposit from the tenant as a new landlord- tenant agreement and now that the tenant has vacated the property she wants the deposit back - full amount. Well as it turns out the property has suffered significant wear and tear damage including damage from tenant negligence - repair items that could have been managed at a lower cost had they been brought up sooner. So how much of the deposit is this tenant entitled to? Is there a rule of thumb or percentage that I can withhold to cover damages? Cheers!

[Mike Makkar]

Previous seller should've transferred this over to you. Just makes for cleaner accounting. Do you keep the lease document updated?

In the mean time, do a complete assessment of the repair costs to make-ready for the next tenant. There is no rule of thumb, but you can take 50% of the repair costs should come from the deposit. 

The argument for 50% of deposit is as follows; it costs 8% of gross income to make a house ready. i.e. One month's rent. If it takes double, ie. 2 month's rent to make it ready, then it should come from the security deposit. Plus 50% of costs is a fair trade between you and the tenant.