Tenant rent check returned in GA

[Sreeni Guntupalli]

Hello All,

I have a tenant who has been paying rent regularly until December (in Cumming, GA). But, the January rent got delayed and I was finally paid by check which got returned due to NSF. The current lease expires end of March and there was some initial interest on both of our parts to renew the lease. One point of note is that I did receive three months' rent as a security deposit as there were some concerns when I initially signed the lease in 04/2019. I did offer the tenant late last year that I am open to adjusting two months' portion of the deposit towards February and March rent payments if we renew the lease (as he was a good tenant at that time). 

The tenant now claims that he wants to use this deposit for rent payments for January - March. I don't think I want or need to allow that as I want to protect myself for any issues identified after they vacate the property. I did confirm to him that I will return the security deposit within 30 days after the property is vacated. He is threatening legal action. Please suggest any course of action to this novice investor! I did send him a formal email on the returned check. I am considering sending a formal notice to pay or quit. I really appreciate any guidance on this. Thank you.

[Kyle J.]

If it were me, I'd send him whatever your state's version of a Pay or Quit notice is, and then if he didn't pay I'd start eviction proceedings.  There's no way I'd allow him to stay for three months without paying rent and just try to use the security deposit towards those month's rent.  What if he left the property damaged?  You'd have no security deposit to deduct against. Or worse, what if after March he didn't leave at all and just kept not paying rent?  You'd still have no security deposit plus you'd be stuck with a non-paying tenant and be three month's behind in starting eviction proceedings. 

January is almost over, and it sounds like you still don't have January's rent.  So I wouldn't wait any longer to address this.  Especially since he's made his intentions clear.