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I rent a house to college 6 college students.  Initially they were going to rent it for two years. Now that the two year mark is coming up,  two of the students said they would rent for another year and they would find four other students to share the house.  I am ok with that, i would just renew the lease for the two and create a new lease for the new four students.  My question how should i handle the Security deposit i Initially collected one months rent. I was thinking of returning the entire security to all six of the students and asking for a new security deposit.  In the future, how is it best to handle the security deposit. If they move out at different times, how do i handle giving back the security deposit to the ones that left and keep the security to the ones that are remaining and collect the security deposit from  the new students.?

Have all tenants on 1 contract and state that all are equally responsible for the rent. State that rent must be paid with one check. This way, some one will take charge and do the work of collecting checks. Also, if a check bounces, they all will be responsible and deal with the tenant that’s at fault….. The same applies to the sec.dpst. …If anyone leave, the remaining tenants will have to payoff the tenant that’s leaving and deduct any damages and collect from the new tenant…..Contract – when a any tenant leaves, have them give you the proper Notice to Vacate to include last day and their signature/date….. When remaining tenants find a new tenant, collect the credit check fee and run a credit check. If approved, create an Addendum stating the new tenant, name and move-in date. Also state that tenant is part of the existing Contract/Notice of Change, if any and that the sec.dpst will be given to the current tenants. Have new tenant sign/date Addendum….. I would not return any deposit. Check with tenants to see if tenant leaving is responsible for any damages. Have them give you a letter stating so. Tell them you’re rewriting lease and they should pay off tenant leaving. This is due to the fact that they will responsible as mentioned above. If they are not willing, Send them a Notice to vacate and find new tenants. Keep me posted. -----Disclaimer: Since I’ve been answering a lot of questions, I thought I would make the following statement. I’m not affiliated with EZlandlord Forms. I’m just here (not sure how long) to help those that have questions. Unfortunately, it is impossible to give comprehensive real estate/tax advice over the internet, no matter how well researched or written. Therefore, it is up to you to become familiar with Fed/State/Local Tax Laws. Also, if you have real questions, you should consult with an attorney or tax professional……Having 40+ yrs with Rental Property and done well, it’s my way of “Pay it Forward (check out the movie).” I always like to know if the suggestions I offer are helpful. Feel free to comment anytime. Thanks in Advance. BTW...check out the Rental Property Organizer at Simp-List.com. Free Trial Download with data. Check out the new $$$$ for 2013

I do collect one check each month for rent. My problem with your answer is that the contract states that i collected security deposit upon signing.   So when one person leaves and another comes you are saying the tennants should pay the security deposit back to the one that leaves and collect from the new tennant. What is to say that tennant that leaves comes back to me stating i want my security deposit back.   I will have to trust the current tennats that they gave back the security deposit.  In other words i have no proof that the tenant that left received their security deposit back and i don't want them coming after me saying they never received it.  Would it be easier to give back that persons security deposit and collect from the new person.  This way i have proof of what has been collected and paid. Remember i am dealing with 22 year old kids. They can't even change the air filter for the central air every few months so it's easier if i just do it.  

Did tenants all come in as a group or did YOU rent to each one separately as they applied?

They all came in as a group.  Total of six, four are leaving and two are staying.

In your current situation, it may be best (depending on contract verbiage) to return deposits as you mentioned originally. The problem is that you’re in the same situation as mentioned in your reply – what stops the remaining tenants from stating that it was the other tenants that did the damage? How are you going to break down the cost of cleaning and repairs? How are you going to arrange cleaning and fixing damage with tenant remaining. I can see pointing of fingers between the 2 groups. This puts you in the middle and some may still state that you owe the $$$$ several months later after they move out.....Another example - you gave the leaving tenants their deposit - this leaves you short. It takes a few months to find new tenants. Current tenants decide to have a party, cause damage and vanish? Now what? Another example – are you collecting full rent? If not, where’s the incentive for remaining tenants to find a new tenant? Or, are you going to absorb the cost? .....This is why I like to keep multiple renters responsible for the sec.dpst. disbursement, getting the place ready and finding a new tenant. I do the checks/approval after they find a new tenant and use an Addendum (stating the terms in detail) to add them to the contract. Since remaining tenants returned deposits to tenants leaving (get a copy for your records), I reimburse them the amount collected from new tenant, which should be the same as the tenant leaving…..Your other option is to have them all move for a few weeks, do the cleaning/repairs. Return remaining sec.dpst. Start over with new contract…. There is no one solution to your situation. You have to decide what is best for you. Just make sure you document everything in writing with all parties. Hope this helps. -----Disclaimer: Since I’ve been answering a lot of questions, I thought I would make the following statement. I’m not affiliated with EZlandlord Forms. I’m just here (not sure how long) to help those that have questions. Unfortunately, it is impossible to give comprehensive real estate/tax advice over the internet, no matter how well researched or written. Therefore, it is up to you to become familiar with Fed/State/Local Tax Laws. Also, if you have real questions, you should consult with an attorney or tax professional……Having 40+ yrs with Rental Property and done well, it’s my way of “Pay it Forward (check out the movie).” I always like to know if the suggestions I offer are helpful. Feel free to comment anytime. Thanks in Advance. BTW...check out the Rental Property Organizer at Simp-List.com. Free Trial Download with data. Check out the new $$$$ for 2013

I will have the tenants that are remaining sign a renewal before the lease is up. It has been agreed upon that they will find 4 new roomates.  This way the remaining tenants will still be responsible for the full rent. I will inspect at the end of the lease before the 4 new tennants move in.  Any damage will be subtracted from the 6 initial tenants.  I will return the inital security deposit to all of the initial tenants. Which was $2500 (one months rent)  Luckly i don't forsee any damage as i do periodic inspections and all has been good so far.    Now for the new contract i am torn between collecting $2500 in general or $500 from each tenant. (there will be six tenants) .  So i can just give back the $500 to each tenant that is leaving and  collect $500 from the new tenant that is moving in.  Having them all move out for a few weeks will create an inconvience for them and they are great tenants and i don't want to loose them.

The sec.dpst is the same as having an insurance. Your statement “Luckly i don't forsee any damage as i do periodic inspections and all has been good so far,” is like saying “I feel lucky that the house will not catch on fire , therefore I don’t need fire insurance.” ……I strongly feel that since they’re renting the place as a group, it’s no different than renting to a couple. They should give you one check for the deposit just like the rent. If someone leaves, the remaining tenants should deal with it. They know best who did any damages. Otherwise, you lend up in the middle of he said-she said….maybe others here can share their thoughts or experience. . -----Disclaimer: Since I’ve been answering a lot of questions, I thought I would make the following statement. I’m not affiliated with EZlandlord Forms. I’m just here (not sure how long) to help those that have questions. Unfortunately, it is impossible to give comprehensive real estate/tax advice over the internet, no matter how well researched or written. Therefore, it is up to you to become familiar with Fed/State/Local Tax Laws. Also, if you have real questions, you should consult with an attorney or tax professional……Having 40+ yrs with Rental Property and done well, it’s my way of “Pay it Forward (check out the movie).” I always like to know if the suggestions I offer are helpful. Feel free to comment anytime. Thanks in Advance. BTW...check out the Rental Property Organizer at Simp-List.com. Free Trial Download with data. Check out the new $$$$ for 2013