Should I keep the security deposit ?

30 Replies

I am a first time landlord and I am already having problems with my tenant paying late. She usually pays 2-3 weeks after rent is do. It’s not long enough to get through an eviction process I’ve tried but still a pain and confidence killer. I don’t plan on renewing her lease I was wondering would it be normal to keep the security deposit for a tenant that always pays late? And also what can I do to get her to pay on time?

You are confusing late rent with what a security deposit is for.  

If they are paying late are you charging a late fee?  If you didn’t put one into your lease that’s a learning point for you.  Also, are you posting a notice of eviction the day you legally can when they haven’t paid?  Do they communicate with you about being late?

For the security deposit that depends on the state of the property when you rented it to them versus the state of the property when you get it back. Minus all normal wear and tear items that is what you can charge them.  

But based on what you said your tenants have ZERO incentive to pay on time.  Why pay your rent when there isn’t a punishment for it.  Train your tenants or they will train you.  

@Drayden Morgan In my state (CT), tenants forfeit interest on their security deposit for any months they pay rent 10 days or more late if the lease doesn’t have a late payment penalty that the tenant actually pays. You may want to look into seeing if your state has that. 

You can’t keep someone’s security at the end of their tenancy if they were late some months paying the rent though, that doesn’t fly. 

In Texas, you cannot just “keep” the security deposit. However, once the lease has terminated, you may deduct:

-Any damage to the property 

-Any unpaid rent and late fees(provided they are spelled out in the lease agreement)

Why are you letting her get some far behind without beginning the eviction process?

Texas landlords due not pay interest on security deposits 

@Drayden Morgan absolutely  NOT!!!  Keep their money because they paid you in full just late,,,,, NO!

If the property is damaged beyond normal wear and tear then yes, but again, NO. Why they paid you 

Good luck 

First of all, NO. You cannot make up your own rules. The more important fact here, is you clearly are very ignorant on the laws. Before you anything else, find a copy of your states landlord tenant laws and read them front to back. You have demonstrated that you don’t know enough to be a landlord. You are being paid to ensure someone has a roof over their head. Act like it.

As a new landlord, it is essential that you read through your state and local landlord/tenant laws and know them as well or better than your tenant does.  If you have a signed lease, know all terms there as well. Even standard leases should have a late payment clause, so follow it.  Security deposits are serious business, and some states allow tenant to sue for 3x disputed amount plus attorney fees, so always handle security deposit according to landlord/tenant laws.  Even if your lease stated you could keep it for nonpayment, it likely would not be allowed under state law.  If you're really unsure, it may be best to find good management and pay them for a  year or so until you're comfortable with the process.  It's just as hard to find good management, however, as it is to find a good tenant, so if you take the time to do the research and know your rights -- landlord/tenant, fair housing, screening tenants, hardening your rentals, etc., then you'll benefit moving forward.

@Account Closed Hit the nail on the head. I’ve never seen a lease agreement with mount late fee terms. You should be charging them per your lease.

I will often waive the late fee ONCE per tenant if there’s a good reason and communicate.

Plus, the day after rent is due and they haven’t paid nor communicated, you need to post a Pay or Quit.

You’ve trained your tenants that it’s ok to pay whenever. I’d follow up with them, reiterate the terms of the lease, and start following your lease starting August 1st.

@Drayden Morgan

Many of the good intentioned people on this thread are giving you answers based on their state and not Texas. There is a different answer for every state 

In Texas, once the lease terminates, you absolutely can deduct any past due rent, accumulated late fees and and damages by the tenant from the deposit. Just make sure that all is documented and itemized and sent to the tenant within 30 days after termination of the lease and being given a forwarding address by the tenant 

@Account Closed Thanks for the suggestions. I currently am charming a late fee, I’ve even posted a notice to pay or quit the day after rent was late but in the state of North Carolina where the property is located the tenant has another 10 day window after the notice has be posted before I can even file for an eviction. I guess I just picked a bad tenant and should tighten my screening criteria for next time.

@Greg H. The property is located in North Carolina. The way North Carolina’s eviction process is set up you post a notice to quit the day after rent is considered late. Then you must wait 10 days before you file for an eviction. From that point it takes about 14 days before you show to court and as long as they pay before the court date they can stay in the house.

So I’m charging a late fee and also posting notice to quit but I can’t get the tenant to pay on time.

Originally posted by @Drayden Morgan :

@Anthony Wick they must make three times the rent, have a clean background, and been at there job for atleast a year. She fit the criteria.

What about credit score? Evictions? Pets? Have a clean background is subjective in nature.   Your idea of clean versus my idea of clean can be greatly different.

 

Hopefully, you followed NC's law of notifying tenant which in-state bank and address the security deposit trust account is held or what insurance company holds the bond if it's not an in-state branch. Landlord or their agent has 30 days from start of lease to provide tenant with that information. Otherwise, it's my understanding that tenant may demand their entire deposit back, and court may award them attorney's fees as well if it comes to that. I have property in NC, so I'm familiar with their crazy security deposit laws. VA is not so strict.

@Drayden Morgan

Quick questions: are they paying late CONSISTENTLY -- are they paying late fees CONSISTENTLY -- are they paying IN FULL, including late fees, but just late?

Coz I'm thinking if that's the case, maybe just consider it extra income?

If you're uncomfortable with that arrangement (particularly threatening eviction each and every month), maybe all they need is a reminder a week or so early. Maybe (just maybe) they're using your eviction notice as a reminder?

Just thinking out loud -- dangerous, I know --

Originally posted by @Drayden Morgan :

@Greg H. The property is located in North Carolina. The way North Carolina’s eviction process is set up you post a notice to quit the day after rent is considered late. Then you must wait 10 days before you file for an eviction. From that point it takes about 14 days before you show to court and as long as they pay before the court date they can stay in the house.

So I’m charging a late fee and also posting notice to quit but I can’t get the tenant to pay on time.

Correct me if I'm wrong, but it sounded above like you said they are habitually PAYING you two to three weeks late.  On top of that issue, you are also charging a late fee every month.  If they are paying the rent and the late fee, as long as they continue to pay, I'd be alright with it.  Instead of 850/mo you're getting 900. 

But no, as it is clear now to you I'm sure, you can't just keep the security deposit because you feel like they are causing a stressful situation for you.  If you make up your own rules, you could be subject to a lawsuit.  Study.

 

Originally posted by @Alvin Sylvain :

@Drayden Morgan

Quick questions: are they paying late CONSISTENTLY -- are they paying late fees CONSISTENTLY -- are they paying IN FULL, including late fees, but just late?

Coz I'm thinking if that's the case, maybe just consider it extra income?

If you're uncomfortable with that arrangement (particularly threatening eviction each and every month), maybe all they need is a reminder a week or so early. Maybe (just maybe) they're using your eviction notice as a reminder?

Just thinking out loud -- dangerous, I know --

 Hah, I didn't even get to the bottom of the thread yet and posted essentially the same thing.  

ok, ok...I think that we can all agree that this tenant and situation is just not working for you and I'm sure that you are doing everything correctly, even though you haven't shared every detail of your lease agreement. Continue to do all the right things, but going forward with the next tenant...consider making all rents due by the 28 and late on the 1st. We all are so trained to live by rent due on the first and late on the 5th. Pushing the date back a few days and diverting from the stigma, may give you a little more time to get the eviction process complete without it being so far late in the month and closer to the next month. Of course you have to make sure you file the day of. Stay sharp my brother and best of luck.