Security deposit at the time of lease renewal ?

Question

Hi Everyone -

Hoping to get a point of view.

I have a tenant since the last 10 months in a brand new home I purchased as investment and I have visited them a couple of times to make sure they are maintaining the home. Overall the tenants has a stable job, great credit score, has been been paying before time and very responsive. Never missed a payment.

Inspite of letting them know a few times, the home tidiness is what worries me a lot which might be primarily because her hands seems to be full with 3 toddlers and a job. I see that the carpets cleaning is being ignored, there are many stains all over, the paint on the walls are starting to wear with kids marking and drawing several places.

This leads me to believe that if and when she moves out, I will have to replace the carpet completely and also repaint the interior walls. The security deposit will not cover even 50% of that expense.

The tenant wants to renew the lease for another 1 year. Now my questions is: CAN I ask ANOTHER (2nd) SECURITY DEPOSIT when I renew ? That way, I know that the expenses to fix the carpet and walls will be covered for.

Is it legal to ask for another security deposit at renewal ?

Carson Wilcox · Answer

So I think the answer that matters is @Colleen F.  The damage is done.  You have a steady paying tenant.  Maybe bump the rent a bit at renewal to grow your replacement funds... but they might stay 5 years!  moving with kids is a PAIN.  if they move well down the road, you would have had a paint and carpet ANYWAY.  let alone dont put carpet in a rental...  ha.    Take your emotions out of it.  You can boot these people or maybe piss them off with high demands.. and buy carpet and paint NOW with several months of vacancy.  or you can leave them in there, increase their rent a bit, save for the turnover, and do it in who knows how long when they move.

Jack I. · Answer

I won't even try to touch the legal parts...you should have a lawyer as part of your team and ask them.

That said, I have a lot of rentals in the Sacramento area...and you sound like your tenant is educating you well on what it is like to be a landlord. My advice is to develop strategies to deal with it.

Some strategies that could work are:

1. Put in LVP flooring ( luxury Vinyl planks ) They are virtually indestructible.

2. Standardize on a paint color and get good and fast at repainting.

3. Value renters that pay on time and stay in your place a long time.

Hope this helps...

Avtandil G. · Answer

In CA, you can only deduct expenses in excess of normal wear and tear. Making unit rent ready may include both normal wear and tear (i.e. spot painting walls) as well as excessive damage (i.e. replacing broken toilet). For carpet, normal life is 5 years, so you'd either need to clean it, or provide a proof that it's nor serviceable if you want to charge for its replacement from the security deposit. CA is notoriously tenant friendly and small claims courts in general side with tenants, so you should have your t's crossed before you decide to retain any portion of the security deposit. As suggested earlier, having a lawyer would help, but another and simpler option is to rely on a professional property manager - good one will remove a lot of headaches for you

Justin Abdilla · Answer

If you happen to be in Illinois, there is no maximum security deposit in this state.  These laws are very state specific so we probably can't give you some good analysis unless we know where the property is.

Kalpesh Kamdar · Answer

THanks @Carson Wilcox and @Jack I. for the inputs, very helpful

Carson Wilcox · Answer

Let alone that security deposit isnt really meant for damage... come on... even in Ca. where rent is like $4k for a house... if they damage even one system (floors, paint, counters etc) it doesnt cover it... Security deposits are a filter to ensure the person has $...

Kalpesh Kamdar · Answer

Thank you @Steve Smithy , @Colleen F. , @Andrew B. . I will research the state law further. This was a question for a property in california.

Colleen F. · Answer

Since the damage is done if she is paying well and on time  you really are better to keep her. It doesn't increase your turnover cost.   As far as deposit local law will tell you if you can do more then a month.  If you put your location in you will get more state specific input.  Some states you can only do one month.  Keep in mind normal wear and tear you can't charge for and carpet cost is pro-rated for the life of the carpet which is 7 years.  Some marks on walls are expected. Might be better switch those carpets to vinyl on turnover.

Steve Smithy · Answer

Well you can certainly increase the deposit to at least match the 1 month rent, I think you could make the new deposit even higher for sure to be whatever you want (whether they want to pay it is another matter).  It might depend on your state though, the max deposit amount.

There is a certain amount of wear and tear expected when renting, which you can't charge them for.  You can just say you don't want to renew their lease and find new tenants, which is likely a loss of at least 1 month rent.

Security deposit at the time of lease renewal ?

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