Importance of Security Deposit? : ezLandlordForms

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Michael &

started a topic over 12 years ago

Importance of Security Deposit? Here is the situation: I have a prospective tenant that is offering to prepay the whole rent amount in consideration of a discount. We negotiated that I will receive $6,500 prepaid rent for a term of slightly more than six months. However, he does not also want to pay the $1,000 refundable security deposit I put in the lease. He thinks it is a duplication. The $1,000 security deposit will just sit in a savings escrow account at ~0%. It will only be beneficial to me if there are damages during the term of less than $1,000 and will give me leverage to simply deduct for damages. The tenant seems to be of good credit quality, is established middle-aged professional that will not live in the home, but is signing the lease with his college student daughter that will be the resident. The only concern is that the college aged student actually does do damage and I then have to pursue them for payment. Of course, $1,000 might not even cover all potential damage. I am leaning towards taking the risk and just waiving the security deposit, but wonder if I am being too trustful / naive. What do you think?

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Karen S

said over 12 years ago

I never waive security, but its a personal decision. They are already getting a discount on rent right, so then they also waive security as well?

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Christian S

said over 12 years ago

There is no way that I would waive a security unless I had a huge apartment complex and was running a special to fill house. Outside of that NO WAY!!

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Curtis B

said over 12 years ago

Never ever.

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Brian A

said over 12 years ago

Explain to him that the security deposit is a protection put in place for possible damages. Without it they have no reason to worry about damages. They most likely know that at the end of the 6 months if there are damages you are then put in the position to have to go to court to collect and then you have a cost associated with that. and it may be more that what you will collect. You could possibly put it in writing that you will do a pre and post walk through and any damages must be paid for within 30 days and if not you will go to court and HE will pay all court fees and costs for both parties. Another thought (also, put this in writing) My neighbor has several units and she does a walk through ONCE PER MONTH and any repairs are done right then and paid for within 2 weeks! This helps catch small problems before they become larger ones. This would be my suggestion since his student daughter will be living there and may not know basic home repair and upkeep. Maybe ask for a small "retainer" deposit along with that last suggestion. Say 200 dollars. you can use that foe any repairs and he can replaetish it if needed each time.

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Dawn A

said over 12 years ago

I wouldn't dismiss the security deposit. Just find another tenant.

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Bob R

said over 12 years ago

@Michael ...are you still negotiating?

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John T

said over 11 years ago

I would be careful of taking prepaid rent. For example in the stat of Michigan anything besides the first month rent is legally considered a security deposit. Since the state of Michigan does NOT allow more than 11/2 times the rent for a security deposit, you could be breaking the law. Check with you state and local law about this. But to your question Dont ever wave the security deposit.