Security Deposit as Last Month's Rent?

Question

First, thanks for stopping and helping me with this. Long story short; I am renting a 1bed, 1bath condo to a couple. They are up for lease renewal on August 15th. I offered them the same rate as they have now and said they needed to provide 30 days notice to me whether they want to renew. The woman (who's name is on the lease) just notified me that she is leaving but the male wants to stay and sign for 1 more year. She is asking if we can do an early evaluation and inspection of the unit before she moves out and if everything looks fine she is asking to us the security deposit (equal to 1 month's rent) as her last months rent.

Has anyone done this before? Any thoughts? Thanks in advance

Peter Tverdov · Answer

Hopefully your state Governor hasn't encouraged tenants to use their deposit to pay rent. Comrade Murphy has done that in NJ and it's been a nightmare for us to deal with.

Sharlene Mulchandani · Answer

@Matt Lorenzo I agree with what most others have said on this thread. I suggest you treat the security deposit and the last month's rent separately. Even though she's willing to do an early inspection of the unit before she moves out, there could always be damage after that, or while she's in the actual process of vacating the unit. In that scenario, you will not be able to use a part of the security deposit for any damages or repairs.

Percy Matsunaga · Answer

@ Matt Lorenzo

I would definitely not accommodate the security deposit as the last months rent.

If she is moving out then the Male can pay her the amount due at termination of the lease. Then the male can sign a new lease with you and already have a security deposit with you.

They signed a 1 year lease and at the end typically there is a walk thru to make sure the property is in good condition for the next tenant. You can do the walk thru with the male and anything that needs to be repaired should be taken out of the security deposit.

Adam Martin · Answer

I wouldn’t do it this deposit is there to protect you not for the convenience  of the tenant to use as last months rent.  If she doesn’t move out or causes damage you are left with nothing to protect you as well as the tenant won’t have the same incentive to leave the place in good order.  Also if she is leaving and getting her deposit back have you collected additional for the other tenant who will be staying to make up for the return to the roommate.

Mike McCarthy · Answer

@Matt Lorenzo agreed. Deposit is never for last months rent, and in some states, isn’t allowed to be used for rent.

They also need to sign a lease termination (one page, lease ends on July 31st).  Then the guy needs to sign a new lease with only him on it. Make it clear in the new lease that move in condition is based on when he moved in (2019).

As for her deposit, if they paid the deposit separately, I would return it to her within 30 days (per state laws). I would also collect the additional deposit from the guy when the new lease is signed. But if they paid with one check, then it’s up to them to figure out (and state that in the lease term letter).

Documenting it all keeps everything clean and makes sure everyone understands what’s going on.

Account Closed · Answer

What state is the property in?

Account Closed · Answer

my lease agreement specifically says they cannot use the deposit as last months rent. What if you use it and then that last month something is damaged? Then you have to pay out of pocket

Theresa Harris · Answer

I wouldn't do it.  You need to do the inspection when she moves out.  If the other person living there is not on the lease, you need to screen him.  You will also have to collect a deposit from him.  The deposit is to cover damages.  If you do accept him as a tenant, add a clause to the lease that you did an inspection, however, is was not empty and he accepts it as is just in case you missed some damages that you should have billed her for.

Dan DiFilippo · Answer

Never.  Never do this.  In fact, make it abundantly clear when they move in that you will not do that.  In fact, when I did leasing, I included a fee of about $200 if there was any rent balance remaining at the time of move out.

Security Deposit as Last Month's Rent?

Most Popular Reply