New Security Deposit Laws are on the rise!

[Detra Harris]

Hello, I've been getting calls regularly from start-up companies offering what they call "guaranteed security deposit fee".  I'm old school and just getting the hang of online rent payment software (awesome juice -btw), therefore, I didn't respond much to these solicitations.  However, the majority of small claim cases related to tenant/landlord issues involve security deposit matters.  This is something worth looking into.  I own several properties in Ohio, therefore, this topic is of interest to me.  As a matter of fact, Alabama, California, Connecticut, Maryland, New Hampshire, North Carolina, Pennsylvania, and Virginia are jumping on these new initiatives.  I guess we investors should really take a look at this a bit closer.  Tenants will have 3 options to by-pass security deposits:  1) Apartment security deposit insurance, which may range from $3 to $20 a month paid during the duration of the rental, depending on the monthly rent. 2) Installment plans, which would be paid over no fewer than six months. 3) Payment of a smaller security deposit, which must be less than 50% of the first month’s rent.  Are you in favor of this new law?  or could it be problematic for property owners?

[Jennifer T.]

To me, a tenant paying the security deposit and first month's rent is...in a way...part of the screening process.  Because if they don't have the wherewithal to save some money over a period of time, in order to come up with the security deposit, than they are probably also only one "short" paycheck or "car repair" away from not having all of the rent for a particular month.

In my early, naive days I let two different tenants pay me only half the security deposit, with the rest of it promised within one month.  Didn't collect another dime from either one.  One of them did a "midnight move-out" only 4 months into their lease.  The day after rent was due and still owing me $300 from the month before (again, young and naive! lol).  One of them is still my tenant four years later so I'm not "quite" sorry I rented to her.  But she has ALWAYS been a problematic payer.

I've also occasionally had to evict people, so I've seen what happens when people know they aren't getting their security deposit back.  Which, "I guess" these SD insurance programs would take care of the cleaning cost and damages.  At least in a perfect world.  But all other types of insurances are usually a nightmare to deal with and have reams of fine print to get out of paying.