Property Managers and Security Deposits

[Annette Radvansky]

Is it normal for a property manager's agreement to take the tenant's security deposit and hold it for the life of the lease? A PM I considered stipulated this in the contract. It also put the liability on me to pay it at the end of the lease, less deductions. But what if PM went bankrupt or out of business or ran away with all his clients security deposits? I would still have the burden to refund the deposit. There was nothing in the contract that would guarantee the PM would refund at the end of the lease. Is this normal?

[Rick Pozos]

@Annette Radvansky I understand that you try to reduce your possibilities for loss, but there are no guarantees. This is where your due dilligence comes in. Talk with the PM and make sure that you are comfortable with them. Find out how long they have been in business, how many properties they manage, etc. Get to know them. You are putting lots of trust in them, you want to make sure they deserve it.