Can a Landlord Use a Security Deposit for Unpaid Rent?

The security deposit you charge new renters can be useful in many ways. If a tenant damages the property or skips out before the lease has expired, the security deposit can offset your losses. But what happens if a tenant can’t pay a month’s rent? You may wonder whether you can — and should — use the deposit to cover a month’s rent.

Using a Security Deposit to Cover Rent

In addition to covering the cost of damages beyond normal wear and tear, a landlord can use a tenant’s security deposit to cover expenses resulting from breaches of the rental agreement. This includes using the deposit to pay for unpaid or delinquent rent. 

As the landlord, remember that you must maintain accurate records that itemize each amount you deduct from the security deposit.

What if the Security Deposit Isn’t Enough?

Setting a security deposit amount is an important concern. In general, a deposit that’s equal to two times the monthly rent is usually sufficient. 

However, suppose that you encounter an especially difficult tenant who causes physical damage to the property in addition to missing rent payments. In this case, you may have to file for damages in small claims court to recover your financial losses.

How Can You Avoid Unpaid Rent?

You might have a good tenant who experienced a financial setback. When this happens, you can negotiate a payment plan to avoid unpaid rent and the eviction process. If you choose to take this course of action, make sure to maintain open communication with the tenant. 

Allow for the repayment plan, but confirm that the tenant knows you expect them to meet their obligations. If the lines of communication fail or the tenant fails to keep up with payments, eviction may be the only solution. In this situation, you can use the security deposit to recover some or all of your financial losses.

Turn to Experience-Backed Property Management

Reliable Property Management has the experience and knowledge you can rely on to effectively manage the finances and upkeep of your property. To learn about the specific services we offer, call us at 443-869-3799 or contact us online today.