So many of the disputes between vacation rental homeowners and their tenants every season involve the issue of withholding security deposits after a tenant’s stay. In a previous post, Vacation Rental Security Deposits – Too Much or Too Little?, I discussed such issues as the importance of requiring a security deposit and why, how much to require, and when it should be returned – assuming there were no problems. Although WeNeedaVacation.com strongly endorses the use of requiring security deposits for every rental, we are concerned about the number of homeowners who misunderstand their rights concerning the withholding of these funds, the proper process by which they must do so, and the negative impact doing so may have on them in the long run.
What justifies the withholding of security deposit funds?
First of all, read your lease. Hopefully, you use a really good one like the sample one we make available to our homeowners, which includes the following language:
Deposit refunds will be returned within X weeks of TENANT’S departure provided the property is left undamaged and without excessive cleaning required to ready the property for the next tenant. TENANT agrees to repair or replace any damage to the premises resulting from said tenancy. Damages that may be claimed by LANDLORD from TENANT are not limited to the amount of the security deposit and shall include any and all costs incurred by LANDLORD to recover such damages including attorney fees. Any deductions from security deposits will be confirmed with estimates, invoices/statements or receipts for costs incurred by LANDLORD.
Basically, homeowners are justified in withholding funds from a tenant if EXCESSIVE cleaning is required or any of the property has been damaged or removed without being fixed or replaced.
What does NOT justify withholding funds?
• Normal wear and tear. This is fairly vague, but especially when agreeing to accept children and pets, screens can get somewhat damaged, scratches can occur, shells and candy wrappers can be left behind, etc., and, within reason, this is acceptable.
• If the property damage cannot positively be attributed to a specific tenant.
• If the furniture has been moved and not restored to its proper place – unless this has been specifically noted in your lease.
• If things aren’t left just as you expect but are still within the limits of “broom clean” (not “sanitized” as if ready for the next tenant) and in decent repair.
What steps are you required to take?
In order to withhold funds from your tenant’s security deposit, you must:
• Notify them immediately, preferably the same day they check out or at least within 2 days
• Notify them by email, or possibly by phone and then followed by an email or letter – NOT by a text message or by a voice message alone, which can get lost or the tenant can deny receiving it.
• Document the damage or excess dirt or mess with pictures, if possible, and/or providing receipts or invoices.
• Be very explicit prior to your tenant’s arrival about what your expectations of them are when they leave your home.
• If you have specific requirements, particularly if they are out of the normal realm, make sure they are covered adequately in your lease. Read more about preparing your lease.
• Also, be sure to leave some kind of check-out list in your home reminding them of your expectations. Read more about managing tenant expectations.
Be aware of the possible negative repercussions – is it worth it?
Even though you may be convinced that you are completely within your legal rights to withhold some or all of your tenant’s security deposit, be careful of what may ensue if/when you do. A relationship which started out very cordial and positive will undoubtedly go sour quickly when an (often unsuspecting) vacationer discovers that he has been accused of a wrongdoing and will not be receiving some or all of the funds as expected. The ill will and defensiveness can result in their submitting a negative review to your online listing (and, if it meets our Guidelines, we will need to post it), or even a Formal Complaint, not to mention ruin the chances of their returning for future stays. We have heard from homeowners that they withheld as little as $50-$100 from a tenant and wound up in small claims court with the irate vacationer.
By no means are we suggesting that you never withhold security deposit funds. But it’s critical that you be aware of what’s required of you in order to do so, as well as the possible impact it may have on you or your listing.
Do you have any other suggestions that might be helpful to other homeowners regarding security deposits?
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