Tip #18

Don’t Use the Deposit for Last Month’s Rent

Written on December 16, 2012 by , updated on June 8, 2014

Face of Jackson on Money

Jackson, looking worried about your finances

As a Landlord, never volunteer to accept the deposit as the last month’s rent.

On the practical side, if you use the deposit money for rent, what security do you have when they trash the property?

On the legal side, only a few states even allow the deposit to be used as rent money, and even then, there are strict rules that govern the disbursement of that deposit.

It’s messy and will make your taxes even more complicated. Just don’t do it. Further, if you don’t dot your i’s and cross your t’s, the tenant could sue you for not following the correct procedure.

Keep rent money separate from the deposit. Make the tenant fulfill all of the obligations of the lease, including payment of the last month’s rent. Then give the deposit back within the allowable allotted time, minus any damages.

photo credit: Thomas Hawk via cc
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