Security Deposit – Collect Certified Funds!
As with anything pertaining to rental housing, collecting security deposit is key to leveraging your risk throughout the lease term. More security deposit reduces your risk and less security deposit increases your risk as a landlord.
However, many of the landlords we have represented also need to address the fact that collecting security deposit and first month of rent as CERTIFIED FUNDS is also critical! Once you hand over those keys to the new rental home, anything goes.
So, what are certified funds? These funds can come in a variety of forms :
- Cashier Check
- Money Order
- Certified Check
- Wire Transfer
As wire transfers typically can be a hefty fee, we typically request our tenants bring a cashier check, money order, or certified check to a lease signing and to MAINTAIN A RECEIPT FOR THEIR OWN BENEFIT. Furthermore, make sure the funds are labeled with the address of the home and words “Security Deposit” in the memo portion of check. Also, what we do is TAKE A PHOTO OF THE CHECK and keep it with the electronic file for the tenant should the funds ever be in question down the road.
Performing these actions may not save you from a poor tenant (only a good screening process will do this). It will save you in court should the deposit amount be contested.
So, the moral of this blog is :
NEVER HAND OVER THE KEYS TO THE HOME UNTIL YOU HAVE THE SECURITY DEPOSIT AND FIRST MONTH OF RENT CLEAR THE BANK ACCOUNT OR RECEIVED AS CERTIFIED FUNDS!