Tenant wants me to accept deposit as last months rent

[Dan Miles]

Hi Everyone!  I have a dilemma with a tenant.  I am not signing a new lease with her.  Nothing was done because she’s a horrible tenant, it’s just a personal issue that requires me possessing the property.  I have given 3 months notice ahead of her lease ending that we would not be signing again.  She is stating she can be out one month earlier than lease ending (which I’m fine with) but is now half month late on rent.  She is asking if she is out by the 1st of September if I can accept the deposit as the current months(last month) rent payment.  Supposedly has been approved for another rental. Thoughts?  I feel like I’m opening the possibility of problems with a stay over, or the place is left with damage and cleanliness problems without recourse.  But, if I don’t accept and she doesn’t pay then I’m possibly in the eviction process after she’s left which means I’m still not paid and I’m out time and money for court.  Any ideas?

[Tom Thomson]

Sounds like you might be better off to cut your ties to this one sooner than later.  One approach could be to let her know you will let her use the last month's rent as her deposit if she makes sure the house is in good condition and clean when she moves out. Get this in writing 1st.   Yes it's possible she may not have it in great shape when she moves out but at least you get the property back earlier and can hopefully move on with a better tenant vs. the potential have having her hold over and having to go through eviction and her for sure not leaving it in good condition.    Risk management.

[John Underwood]

This is why my deposit is always higher than the rent.

This encourages the tenant to pay the last months rent and clean the house so they their higher deposit back.

[Dan Miles]

Quote from @John Underwood:

This is why my deposit is always higher than the rent.

This encourages the tenant to pay the last months rent and clean the house so they their higher deposit back.

This tenant has lived in the home 4 years and has gone through multiple increases.  Do you increase rents and ask for more deposit money on a yearly basis as well?  I’m thinking I’m going to need to receive last months rent and deposit from now on. 🙄

[Dan Miles]

Quote from @Tom Thomson:

Sounds like you might be better off to cut your ties to this one sooner than later.  One approach could be to let her know you will let her use the last month's rent as her deposit if she makes sure the house is in good condition and clean when she moves out. Get this in writing 1st.   Yes it's possible she may not have it in great shape when she moves out but at least you get the property back earlier and can hopefully move on with a better tenant vs. the potential have having her hold over and having to go through eviction and her for sure not leaving it in good condition.    Risk management.

 Yeah…I guess it is just taking the path where I get screwed less. 😂

[Tom Thomson]

I have never ask for more deposit after a rent increase.

[John Underwood]

Quote from @Dan Miles:

Quote from @John Underwood:

This is why my deposit is always higher than the rent.

This encourages the tenant to pay the last months rent and clean the house so they their higher deposit back.

This tenant has lived in the home 4 years and has gone through multiple increases.  Do you increase rents and ask for more deposit money on a yearly basis as well?  I’m thinking I’m going to need to receive last months rent and deposit from now on. 🙄

That is another good way to do it.
My deposit is usually 1.5x the rent so it would take a lot of rent increases to catch up to 1.5x of current rent.

1st, last and normal deposit is also a great way to do it!

When people ask me how much the deposit is, I say it depends on your credit score. 

[John Underwood]

I would tell tenant if they don't pay last month rent you will be forced to file an eviction which will hurt their credit score and ability to rent another place for 10 years. See if that helps them pay up.

[Theresa Harris]

Nope.  You need that money in case there are damages.  She needs to pay the rent.  If she's been there 4 years has you feel that she keeps the place in good condition, then you could offer to apply part of the deposit to her rent, but not all.  Check your local laws to see if that is legal.

[Troy P.]

It sounds like she wants to hold onto her funds to get herself into her new place while screwing you over in the process.  In my state, we have to produce an itemized list of all expenses that came out of the deposit within 30 days of tenant moving out.  If  you don't have a list showing you've used all of the deposit, then the remaining must be returned.  I would never agree to keep a deposit before I know whether I'm using the funds or not.  Rent is rent, deposit is deposit, and I suggest keeping it that way.

[Dan Miles]

Quote from @Troy P.:

It sounds like she wants to hold onto her funds to get herself into her new place while screwing you over in the process.  In my state, we have to produce an itemized list of all expenses that came out of the deposit within 30 days of tenant moving out.  If  you don't have a list showing you've used all of the deposit, then the remaining must be returned.  I would never agree to keep a deposit before I know whether I'm using the funds or not.  Rent is rent, deposit is deposit, and I suggest keeping it that way.

So you would process the eviction even though she will be gone by the end of the month?  I can’t file until the 21st according to state law.  Then they have to mail her the notice to pay…which she may be gone by then.  

[John Morgan]

@Dan Miles

I’ve had serval do this. Don’t let it happen. File for eviction and tell her you’ll drop the case once you receive rent. And that deposits are for after move out inspections.

[Troy P.]

Quote from @Dan Miles:

Quote from @Troy P.:

It sounds like she wants to hold onto her funds to get herself into her new place while screwing you over in the process.  In my state, we have to produce an itemized list of all expenses that came out of the deposit within 30 days of tenant moving out.  If  you don't have a list showing you've used all of the deposit, then the remaining must be returned.  I would never agree to keep a deposit before I know whether I'm using the funds or not.  Rent is rent, deposit is deposit, and I suggest keeping it that way.

So you would process the eviction even though she will be gone by the end of the month?  I can’t file until the 21st according to state law.  Then they have to mail her the notice to pay…which she may be gone by then.  

No no, I would definitely try to avoid an eviction.  I guess my point was I would not put it in writing that I am accepting the deposit in lieu of rent before you have inspected the place.  I would agree with the earlier post to make it clear that you can only accept deposit as rent if there are no repairs or cleaning needed after she's moved out, but I have a feeling that waiving a deposit is also waiving your right to seek any reimbursement for any expenses after move out.  It's too risky for me personally.  Your state would vary, but there's no right answer here unfortunately.

Also, you should definitely get her forwarding address, especially if you take the advice of filing eviction.

[Sean McKee]

Quote from @Dan Miles:

Hi Everyone!  I have a dilemma with a tenant.  I am not signing a new lease with her.  Nothing was done because she’s a horrible tenant, it’s just a personal issue that requires me possessing the property.  I have given 3 months notice ahead of her lease ending that we would not be signing again.  She is stating she can be out one month earlier than lease ending (which I’m fine with) but is now half month late on rent.  She is asking if she is out by the 1st of September if I can accept the deposit as the current months(last month) rent payment.  Supposedly has been approved for another rental. Thoughts?  I feel like I’m opening the possibility of problems with a stay over, or the place is left with damage and cleanliness problems without recourse.  But, if I don’t accept and she doesn’t pay then I’m possibly in the eviction process after she’s left which means I’m still not paid and I’m out time and money for court.  Any ideas?

 Unless this is an outright eviction scenario, absolutely do not give her security deposit back. I've had people ask me this on numerous occasions and I have refused. Every time they left there were damages that I would have had to cover. If she is behind on rent you have several options. You could start reporting her late to the credit bureaus(it would get reported once it's 30 days past due), that might get her attention. Alternatively you can start the eviction process. MOST tenants are bluffing and don't want an eviction on their credit/background.

I would tell her she needs to pay in accordance with state law or you will start the eviction process. I would hold off on cash for keys until she's around 30 days past due. I would not be afraid of the going to court. I know it sucks, but it's one of your best leverage points as a landlord. So far(knock on wood) I've only had to file for an eviction once, and the tenant vacated before the actual court date. Again most tenants won't go this route.

[Christopher Berra]

Deposits are meant for incidentals and in many states are not able to be used towards rent. 

[Shawn Couch]

Quote from @John Underwood:

This is why my deposit is always higher than the rent.

This encourages the tenant to pay the last months rent and clean the house so they their higher deposit back.

 This is always a good move, to have a high deposit.  I would ask for a walk through of the property now also.

[Cory J Thornton]

Hey @Dan Miles - Manage strictly to the terms of the lease. A security deposit is not rent. If she has not paid rent on the first, then send a notice that rent is late and a late fee will be charged on the 5th. On the 6th send a notice that a late fee has been charged and that if the fee and rent is not paid then then a move out notice will be mailed on the 10th. On the 10th serve a pay rent or quit notice giving them ten days to make you whole or be out of the home. If that agreement times out and you haven't received rent, then go to the courthouse and file eviction. Notify the tenant the eviction has been filed and then follow the court process. Most state leases in NC will support this process or one similar. For me it is a hard line, rents are not deposits. Give up the deposit and they have no incentive to leave the home in good condition or you have no funds to repair damages behind them. Feel free to give me a shout if you want to jump on a call. We manage property all over the Raleigh Area, but not Fuquay. 

[Nathan Gesner]

The deposit is your assurance that the tenant will leave the rental in good condition. If you spend it on the last month's rent, you'll have nothing to cover cleaning and repairs.

There are a variety of ways to handle this, but you probably don't want to bother learning them at this point. Just tell her she still owes rent. If she leaves without paying rent, apply the deposit towards whatever is owed, bill her for the rest, and move on.

[Henry T.]

No. Follow the law.  "Sorry, I appreciate your wish to change our contract, but if you are not paid up you will be served with a notice on the 21st."  Have an eviction attorney mail her notice/summons, and that she's going to court. (cost $250?)  She's stalling, you need to play hard ball.

[Melanie Thomas]

No, the security deposit is not a negotiation tool for the tenant.