- ALPS Owner Resource: The Challenges of Security Deposit Returns

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Austin Landmark Property Services

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July 2014

Address
11573 Jollyville Rd.
Austin, TX 78759

Mailing Address
PO Box 202344
Austin, TX 78720

Contact Us
Phone: 512.794.8171
Email: info@alpsmgmt.com
Website: www.alpsmgmt.com

Our Services
  • Real Estate Services to Buyers and Sellers
  • Out of State Property Management Company Referrals
  • Maintenance and Make Ready Services for our Owners and Referring Agents
Managing For YOUR Success

Rick Ebert, REALTOR®, MPM®
CEO
512.794.8171 X 217
alpsmgmt@alpsmgmt.com

Karen Ebert, REALTOR®, MPM®
COO
512.794.8171 X 215
karen@alpsmgmt.com

Mike Ebert, REALTOR®, RMP®
Director of Property Management
512.794.8171 X 211
mebert@alpsmgmt.com

Marc Witmer
REALTOR®, RMP®, MPM®
Property Manager
512.794.8171 X 222
marc@alpsmgmt.com

Pam Fite
Assistant Director of Operations
512.794.8171 X 214
pam@alpsmgmt.com

Mike Gonzales, REALTOR®
Property Manager
512.794.8171 X 218
mike@alpsmgmt.com

Yvonne Dougherty, CTA
Leasing and Management Coordinator
512.794.8171 X 220
yvonne@alpsmgmt.com

Rebecca Panacci, REALTOR®
Assistant Property Manager
Accounts Coordinator

512.794.8171 X 216
rebecca@alpsmgmt.com
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Jeff Ebert
Maintenance Coordinator
512.794.8171 X 224
jeff@alpsmgmt.com

Shelly Longoria, REALTOR®
Executive Assistant to Director of Property Management
512.794.8171 X 210
info@alpsmgmt.com
front_desk@alpsmgmt.com

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Best Practices

Check Your Insurance: Events can happen - flood, extreme heat, earthquakes, fire, and more! It is important to check your insurance to obtain the best coverage possible and ensure that it is current.Review now with your insurance agent before a disaster/emergency occurs.

If An Emergency Occurs: Please be patient and avoid tying up critical phone lines and our time. Our first priority during any emergency is to handle the situation, taking any necessary measures for the safety of your property and your tenants. Then, we will contact you as soon as we are able.

Where Is The National Job Growth Coming From
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  • Word has it that about 30% of new job growth nationally is coming from Texas.
  • Texas business gets tenth straight top ranking with a 4.8 GDP, low unemployment, growing population and low taxes.
  • Austin area makes Forbes' "Big Cities" list for "best for jobs."
  • File sharing firm Box, Inc. of California is expanding to Austin bringing 200 jobs.
  • Austin and surrounding areas have grown from 9.2% to 39% with the highest growth happening in areas where most of our clients have investment homes. This has spurred higher rents.
  • New car sales have rocketed in Austin. Hum, could it be due to our great growth?
  • ALPS staff gears up for the extremely busy summer season.

The Challenges of Security Deposit Returns
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One of the most difficult tasks for a property manager and/or owner, can be refunding the tenant's security deposit to everyone's satisfaction. Any property manager (or owner) is elated when they can issue a full refund because the tenant has left the property in excellent condition, complied with their rental agreement, and paid their rent in full. Unfortunately, there are times when deductions must be made for loss of rent and damages, leading to the dissatisfaction of the departing tenant. However, steps can be taken to optimize a successful reconciliation between all parties.

Step 1 - "Start before the tenant moves in". This may sound like an odd approach to take but common sense steps in the beginning will increase the odds for success when the tenant moves out.

  • First, we prepare the unit in a clean reasonable condition for when the tenant moves in. For, example, it is really difficult to charge for painting when the walls were scarred and marked when the tenant moved in. If the property is in good condition, then it is reasonable to expect the same condition when the tenant moves out.
  • We document the property condition before the tenant moves in. With this completed at the beginning of the tenancy, there are grounds for deductions if there are tenant damages at the end. It may not always be possible to avoid litigation so it is very important to have complete records to defend keeping any or all of the security deposit monies.
  • We conduct a thorough tenant screening. Starting with the right tenant in the beginning eliminates most problems regarding a security deposit refund at the end of the tenancy. A good tenant will care for the property while renting, complete all required payments, and leave the residence in good condition. Good tenants want to maintain a good rental history and credit; in addition, they want their security deposit back.
  • We complete a detailed rental agreement that complies with state laws and executed to ensure that the tenant fully understands and signs what is expected of them during tenancy and when they move out. Proper documentation details what rent is due until the end of the tenancy, when rent is to be paid, and what condition is expected of the property when they move out. The rental agreement also clearly states the amount of the security deposit paid by the tenant.

Step 2 - "Continue important functions during the tenancy." This can avoid legal issues where the tenant feels they have the right to use the security deposit for rent or repairs while they are still renting.

  • Complete necessary repairs in a timely manner.
  • Maintain accurate maintenance records.
  • Keep accurate financial records on rent, late fees, and any other funds collected from the tenant.

Step 3 - "Complete the move out and refund of the deposit in a timely manner." It is important to remember that settling the security deposit in a timely manner will be to the benefit of all parties.

  • The property condition is properly documented and completed with the tenant whenever possible.
  • A refund and/or statement of condition detailing the deductions is issued in accordance with state laws.
  • If circumstances dictate that the security deposit has been forfeited, we itemize repairs and details of all unpaid monies are issue a statement to the tenant at the last known address. This needs to be completed even if the tenant owes the property owner money.
  • Failure to issue a security deposit statement and/or fund within the timeline of state law can lead to larger financial loss.

Step 4 - "Use common sense if there is any dispute regarding the security deposit."

  • If the tenant challenges the deductions, it is important to evaluate if it is worth the dispute. Sometimes, even a small compromise will settle the matter. Remember that a legal action can be more costly than simply refunding the amount challenged.
  • Most tenants do not dispute the loss of their security deposit when they owe more than they paid.
  • When necessary, we consult an experienced attorney, and discuss your options with you based on their advice.

Handling a security deposit is not always easy. By taking the right steps from the beginning of the tenancy until the end, we find the process easier.

The material provided in this newsletter is for informational and educational purposes only. It is NOT legal advice.
Although we believe this material is accurate, we cannot guarantee that it is 100% without errors.


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