So you've invested in a property in Montgomery, Alabama, and now you want to rent it out. What are the next steps?
You need to decide on a security deposit to charge your tenants. Being a landlord involves making financial decisions that will both benefit you and attract quality tenants.
How do you decide on security deposits? Read on to learn more about security deposit laws in Alabama and how they pertain to property management.
What Is a Security Deposit?
A security deposit is a payment that a tenant makes in addition to their lease agreement and the first and last month's rent. It is a fee that covers potential damages and issues with the unit when they move out.
When the tenant leaves, the landlord or property manager does an inspection. If there are damages or wear and tear that are beyond normal, they can deduct the repair expenses from the original deposit.
When you refund the security deposit for your rental property, simply deduct the expenses and give the remaining amount back to the tenant.
Security Deposit Laws
The laws for security deposits can vary from state to state, and Alabama is no exception. You need to know the rules to avoid fines and other legal consequences.
For instance, in Alabama, you can't charge more than one month's rent for the security deposit. If the tenant has pets or other liabilities, you may be able to charge more.
Some states also have rules for storing the security deposit. However, Alabama has no guidelines for this. You can even put the deposit into an account that accrues interest and makes you more money.
Once your tenant moves out, you need to assess the unit and determine what you should deduct from the deposit. You can also deduct any unpaid rent.
The best landlord advice is to evaluate whether the damage is the result of normal wear and tear. Use your judgment on this. For instance, a carpet that is several years old may be naturally worn down.
Returning the Deposit
It is important to follow the law when returning a security deposit. In Alabama, you have a maximum of 60 days to return the funds to your tenant, minus any deductions.
Your tenant must give you an address in writing before you send the deposit. Then, you need to mail it, first class. If you fail to do this correctly, your former tenant could take you to small claims court and you could face hefty legal consequences.
Know All About Security Deposits in Montgomery, Alabama
Are you still anxious about getting security deposits from your tenants? Worry no more. With this guide, you will know all about the process and how to easily collect your security deposits.
PMI River Region can help you navigate any issues you may have as a landlord. We provide both real estate brokerage services as well as property management.
Want to get started with property management in Montgomery, Alabama? Take a look around our site or contact us today for more information.