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Practical Advice for Landlord/Tenant Issues – Part 2

June 7th, 2012 by Diane Tiveron | Filed under Real Estate Law.

Minimizing Exposure in the Landlord/Tenant Relationship

While there is no full-proof way of eliminating exposure to problems or difficulties with tenants, there are a few that one should keep in mind:

  • A detailed rental application with request for references
  • A credit check – authorizations typically needed and should be obtained in any event
  • Social security numbers
  • Adequate security deposits

Security Deposits

With respect to a security deposits, they are generally intended only to protect against damages and unpaid rent, but not to be used as last month’s rent. A landlord holding the security deposit does so as a trustee and the security deposit remains the “property” of the tenant until there has been a default of the lease. A landlord may not co-mingle the security deposit funds with his or her own, and the failure to segregate the funds means recovery of the full security deposit. In the absence of a special agreement to pay interest on a deposit, none is as chargeable, except where the security deposit is an advance for property containing six or more family dwelling units. A landlord can typically keep one percent as an administrative charge and must give the tenant the name and address of the bank at which the security deposit is kept. Many times security deposits can and should be increased in the circumstances involving pets.

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