Description: Your success or failure as a landlord can often depend on properly collecting security deposits for rental properties in Phoenix.
Protecting your rental property in Phoenix takes more than screening tenants, drafting solid lease agreements, and having routine property inspections. One of the most important things every landlord must do is collect a security deposit before allowing any new tenants to move in.
Even if you feel confident that the tenants you place will adhere to the lease and respect your property, there’s always the chance things might go awry. That’s why security deposits are so important. As the name implies, they’re another layer of added security to protect your investment property’s ROI.
Though not required by law, as a landlord, you have the right to require them from your tenants. However, there are rules and regulations that must be followed when collecting security deposits for rental properties in Phoenix.
What Is a Security Deposit?
A security deposit for rental properties is a fixed amount of money given to a landlord by the tenant before move-in day. Ideally, the entire security deposit will be returned to the tenant at the end of the lease because they paid rent on time every month, followed the rules, and didn’t cause any damage to your property beyond normal wear and tear.
Phoenix Landlords Guide to Collecting Security Deposits
As an experienced Phoenix property management company, we know the importance of collecting security deposits and always recommend that any landlord do so. That said, there are things you should know before collecting one from your new renters.
Always Collect Security Deposits Before Move-In Day
A security deposit should be collected after your tenants sign the lease but before they’re allowed to move in. You want to make sure your tenants have legally agreed to the amount of the deposit, what it’s for, and the conditions of its return.
Determine the Proper Security Deposit Amount
Every state has its own security deposit rules and regulations, including Arizona. You’ll want to make sure you’re following them to avoid any complications or possible legal actions in the future.
One of the most common laws governing security deposits for rental properties is how much a landlord is allowed to require.
In Arizona, the most landlords can charge for a security deposit is equal to one and a half months’ rent. For example, if the rent is $1,200 a month, the security deposit can’t be higher than $1,800.
Know What the Security Deposit Can Be Used For
The security deposit must be spent only in accordance with the rental property lease agreement. It cannot be used for:
- Required maintenance and repairs during the tenancy
- Any costs unrelated to the tenant
- Personal bills
- The rental property’s mortgage
Know How to Return the Security Deposit
One of the most important things to know about collecting security deposits from tenants in Phoenix is when and how you must return the money.
In Arizona, the law regarding the return of security deposits is as such:
“Within fourteen [business] days…the landlord shall provide the tenant an itemized list of all deductions together with the amount due and payable to the tenant, if any.”
Here are some of the most important things to remember when returning a security deposit:
- Any security deposit deductions must include a written, itemized statement
- The statement must also include the total amount deducted and any additional money the tenant owes
- You can use some or all of the security deposit to cover things such as property damage, excessive cleaning costs, nonpayment of rent, unpaid utility bills, and possibly a broken lease agreement
- Security deposits in Arizona must be returned within two weeks
Your tenant will need to provide you with a valid forwarding address to send the security deposit statement. This is also where you will send any money left over from the deposit that you’re returning to the tenant. If your tenant does not provide a forwarding address, you’ll send the deposit and/or statement to the last known address of the tenant.
Rely on Expert Property Managers in Phoenix
Are you in need of an experienced Phoenix property management company for your rental property? Then contact us today and learn how easy we make it to earn more profit from your investment.
At Brewer & Stratton Property Management, we can handle every aspect of property management in Phoenix, including collecting security deposits, conducting move-out inspections, screening tenants, placing tenants, on-time rent collection, tenant management, rental property repairs, 24/7 emergency maintenance, and more.We work with landlords and property owners of all levels, from accidental landlords who don’t know the next steps to real estate investors looking to cut costs, maximize returns, and grow their portfolios.