Accept increased rent with tenant's security deposit?
When my tenant's 1 year lease expires, I gave that tenant the option to re-new it with another 1 year lease at a higher rent.
But, the tenant wants to use part of their security deposit to pay for that rent increase.
When the tenant applied, there was some issues with their credit history but their income seemed good. So, I agreed to rent to this tenant if the tenant paid a higher security deposit than I originally asked for.
After I gave the tenant their notice, the tenant says that their income has dropped since last year and wants to explore the option of using part of the higher security deposit to pay for the rent increase.
It might be easier if I use some numbers- I was asking $2750 per month and a security deposit of $2100. With the tenat's credit history, tenant needed to put down $4200 for the security deposit and pay $2750 a month. I wanted to increase rent to $2850 for new lease, but the tenant is asking to use part of the security deposit to pay for that rent increase. So, the security deposit would go from $4200 down to $2100, the amount I originally wanted, and use the rest of that security deposit, $2100, to pay for the rent increase.
What do you think? What are the potential pitfalls to do this?