Security Deposit with more than one signer to the lease

5 Replies

I recently bought a building with pre existing tenants. Many of the units have multiple signers on the lease. When tenants move and I return security deposits, should I divide the deposit equally among the tenants and write a check to each tenant and give an equal amount?

@Rupert Grant

Did the estoppels collected prior to close detail the apportionment of security deposit amongst the signatories to the lease?  If not, then you can divide the returned security deposit equally ... or return a single payment in the names of all tenants.

We rent to lots of students and often have 3-5 housemates as signatories to a lease.  We have a practice of "one lease, one payment" and ask our tenants to designate one representative to send us a single security deposit and single rent payment each month.  If they insist on sending individual rent payments, we charge an administrative fee to cover the extra bookkeeping effort and bank charges.

If there are multiple people on the lease, and no paperwork that states a specific person or persons provided the security deposit, return it to them as a check made out to "tenant 1 and tenant 2 and tenant 3...".  Let them sort it out.

Thank you Roy for your response and insight.  My next project is near a university and I suspect I will have many students.  I will use your method. 

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here