Did you know that New Hampshire is one of the only States that prescribes a minimum security deposit? Security deposits are meant to cushion the damage a tenant in breach may cause to their landlord, but that can only happen if the landlord collects enough as a deposit. They can also only do their job well if managed effectively.
There are many practices one can implement to make managing security deposits easier and to restrict the possibility of conflict. These five tips can enhance how you approach security deposits and simplify your life as a landlord.
1. Stay on Top of the Relevant Laws
Every aspect of security deposit management is couched in New Hampshire's law of leases. Lease law gives you the security deposit limit, tells you where to keep the deposit, dictates how and when you can withhold deposits, and more. Be sure to ask a veteran property manager or legal advisor about these particulars and any changes they might undergo.
2. Keep Security Deposits Separate
New Hampshire law requires landlords to keep security deposits in a separate account in a bank, credit union, or other service registered in the State. The account must also accrue 5% annual interest or more. If you return the security deposit, the tenants are entitled to the interest accrued.
3. Document Everything
Doing a move-in inspection is as essential as tenant screening. The initial inspection allows you to document the rental property's condition, giving you a good evidentiary basis if you ever need to withhold a deposit.
Keep these records, along with the receipts related to the deposit's account, in a file you can access at all times. This practice reduces complications that may turn into disputes.
4. Understand the Deposit Return Process
If you're going to refund the tenant's deposit, you have to do so within 30 days after they move out.
If you intend to withhold some or all of the deposit, you have to follow tenancy deposit rules. You must first give the tenants the reason(s) for withholding. Show them how the property's condition changed since the initial inspection and provide receipts showing how much the damage will cost to repair.
You're only allowed to withhold for repairs for damage exceeding ordinary wear and tear. You're also allowed to withhold for unpaid rent or rental fees.
5. Be a Good Communicator
Be sure to respond promptly to maintenance requests and queries. This can help strengthen your relationship with your tenants and lead to them renewing their leases rather than moving out. In these cases, you simply keep the initial security deposit payment.
Find More Property Management Tips
Rental security deposits are great tools for protecting a landlord's interests. For the best security deposit management policy, stay up to date with the relevant laws and keep good records of everything. Keep deposits in separate accounts, and be transparent in your communications with tenants and during the return process.
If you want to make security deposit management or other elements of the landlord's life easier, you can also partner with a property management service. PMI Green Rock blends time-tested experience with innovative new tools to give the best landlord advice and property management service. Find a partner you can count on today by contacting us.
