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Security deposit receipt template for Administration

well if you've been in this property management business for more than about 4 hours you've had the experience of a tenant moves out of your property you complete the security deposit return statement you send it out to the tenant along with their check for their return you maybe have some withholdings for damage they did and a few days later you get a phone call you get an email maybe they show up at your office and they are hot they are mad they are demanding the full return of their security deposit for unfair deductions you've made to their deposit so how do we handle these situations when they arise hey my friends Mark Cunningham at Grace Management let me share a few best practices on how to deal with this because it's going to happen to you and we believe there's a very specific professional way to walk through this process to ensure all parties are treated fairly money is dispersed ingly and fairly to both the owner client and back to the tenant before we get into this let me just say if you're going to be in the Texas area in early December I hope to see you there I'll be speaking at the lead simple University event followed immediately by the rent scale event where they're doing uh training for business development managers speaking at both of those events jump on their websites I hope to see you there in early December and would love to meet you there so you get the email you get the phone call what do you do couple best practices number one to back up a little bit let me just ensure that we're being reason reasonable in the deductions we make to the security deposit return we see this happening way too often that property managers in our opinion and in the opinion of the law are incorrectly and overcharging tenant security deposit for things they shouldn't be charging for so let me give you a couple things that are the most common mistakes in being unreasonable when you're charging and making deductions against a deposit claim so you need to remember that the deposit belongs to the tenant and you are only supposed to be charging and some states have different laws but the best principle is you're only charging for actual damage or outstanding rent charges owed so no wear and tear and we we misunderstand this so so much what is wear and tear well wear and tear is probably more than you think it is if someone lives in a property for a period of time there's going to be wear and tear which you may incorrectly label as damage or worse yet the owner incorrectly labels as damage when carpets get worn out over time that's wear and tear because they've been walked on they're not designed to last 10 years neither are door handles that start squeaking or blinds that break after a couple years blinds wear out you say well Mark if a blind breaks that's the tennis responsibility well not necessarily depends the age of the property but you just want to be fair and ensure that your owner clients understand the difference between wear and tear versus damage you should have a page on your website that explains this to both your tenants as well as your owner clients the difference between wear and tear versus damage if you don't have one of those jump on our website at rent grace.com you can see how we Define it we'll link to it here in this video we give examples everything from nail holes in walls to holes in walls to carpet damage give specific examples of what is wear and teance not damaged so owners don't start demanding hey you better charge them that tag hole wasn't in the wall when they moved in and you're looking at it with a magnifying glass and you mean you're like give me this little Penny whole nail where they hung a clock you want me to charge them for that yes and charge them for repainting that whole wall as well you can't do that don't do that because you need to make sure your PMA gives you the authority not the owner third don't have standard deductions if you're lease calls for something like hey anytime you do have a move out we're going to automatically charge your security deposit for a security deposit disposition fee we're going to automatically charge you for a REI we're going to automatically charge you for this be cautious with that now I'm not saying that's illegal in some states it is but what many State Attorney General's offices are saying is a standard deduction is not permissible because the idea is the tenant security deposit by definition is fully refundable to them minus damage no damage in charges they should get it all back that's what state attorney generals are saying now if you don't believe me let me refer to a very recent just a few months ago September 2024 the FTC the Federal Trade Commission this was the headline from their website FTC takes action against Invitation Homes they own thou tens of upon thousands of homes they do self-management for deceiving renters charging junk fees that's what we all talk about charging junk fees but we missed the next thing withholding security deposits and employing unfair eviction practices one of the charges against Invitation Homes from the FTC the federal Trad commission was the improper withholding of tenants security deposits now if you read all the information it says this in there it says invitation home security deposit refund practices were far outside of national Norms with the complaint noting that between 2020 and 2022 Invitation Homes returned only 39.2% of consumers Total Security deposits collected compared to the national average of 64% now I don't know where they came up with that national average that maybe the national Apartment Association I have no idea where that number has come from but what they're saying is hey n the national average is that tenants get back 64% of their security deposit Invitation Homes you're only returning 39% so that means you must be doing improper withholdings now I know don't get upset and don't be like well you got to look at the individual cases I Me Maybe maybe those charges were correct well the FTC looked at other things their accounting process for example put charges onto the security deposit return statement every time on the front end then they would remove those charges after walking it your process matters is my point the FTC cares about this your State Attorney General cares about this the the the um Administration we're recording this after after the election so that the Trump Administration they care about this HUD cares about this this is something you need to pay attention to because it's going to be addressed more and more and more did you know HUD has a statement on junk fees did you know the FTC has a statement on junk fees in Property Management you need to be aware of those things okay so you do the deposit return you make appropriate deductions and the Tenant still comes in and demands their full return of their security POS what do you do well number one you need to start with a security deposit dispute form whether they call you whether they email you whatever it is and maybe their claim is legitimate maybe they say Hey you charged me for carpet cleaning I had the carpet cleaned and I gave you a copy of the receipt I left it right there and you're like H you're absolutely right my bad so sorry we dropped the ball on that or maybe they say hey the the holes in the wall you know I I left that property in better condition upon move out I left it better than I found it when I moved in and you say say well gosh I don't remember having all those holes in the wall and I don't remember the the carpet being removed from that back bedroom but but okay let me look at my records here so what you're going to do is you're going to say well hold on let me send you a security deposit dispute form for you to complete and return to me so that we can actually process this think like a business what you're not going to do is be like no that deposit return was correct don't start this arguing a legitimate business is going to have a process for processing the dispute claims that's what you need to have have a security deposit dispute form you give it to them they fill it out they label the stuff they say here's what was incorrectly charged they return it to you and you're going to process it when you review it you're going to review it with honesty don't jump to the fact that no those those charges were legit I walked it myself take a step back be a business owner review it with honesty number one number two remember your goal in this overall process remember the overall goal do you remember what the goal is if you've been listening to me for any period of time you should know what the overall goal is before I tell you the overall goal I want to thank the sponsor for this video second nature we're talking about tenants moving out of properties you know one way to keep them into the property so they don't move is to provide a great tenant experience which can include a resident benefit package RBP by second nature this helps you attract tenants on the front end it helps you retain tenants on the the back end and keep them happy while they're there jump on the website we'll link to it here in the video get information because renting properties is harder than it's ever been you've got to have a way of attracting those tenants on the front end having a resident benefit package things you can offer to your tenants that they're not going to get if they go rent from Joe Smith landlord down the street or the other property management company down the other Street these things are specific to your company you can customize your resident benefit package offering to your tenants what you think is going to appeal to them it's an income stream to you benefits your tenants your owners you as a company jump on their website tell them Mark sent you get the demo learn about the RBP the resident benefit package by second nature it will help your business tremendously they administer it they monitor it there's no backend website it's all done for you okay number three or number two your goal is to make problems go away never ever forget that your goal is not to win the argument on the security deposit return dispute your goal is not to get as much money out of that tenant as you can on the security deposit dispute your goal is to make problems go away so when you did the $200 deduction and the Tenant flips out and they look at the charges and they say that's terrible and you charge me for cleaning which we have to be cautious on depending on your state cleaning is a questionable one unless it's left filthy and you charge them for carpet cleaning and the hole in the wall and a late fee that was back on the lease N9 years ago and they dispute that your goal is to make the problem go away so therefore what you want to do is make a business decision it's no longer about the the princible but they owed me that money they really did not mow the lawn when they moved out and we had to have it go have it mowed well how long were they there 15 years did they ever miss a rent payment no but they didn't mow the lawn upon move out so we charged them for that and a few other things that we found wrong on the property don't do that make a business decision do you really want to go to war with some somebody over $100 security deposit dispute because if they file a claim and they go to your real estate commission or they go to the FTC or they go to whatever your state group is that has tenant representation now you're going to be potentially spending a lot of time and money of yours and or your owner clients to argue over a few hundred your time is too valuable now I'm not saying roll over on these things if there's a legit charge then you need to provide backup show them pictures show them the reason though give them data if you can't make the case legally and professionally to them then you certainly can't make it to a judge so just make a business decision of how hard you want to push back on the tenant who's making the security deposit return claim so a couple things there I hope you find beneficial how can we help you jump on our website pmu.com have you joined our Facebook group yet have you checked out our podcast at at this month's podcast which just was released we went through a number of our company onestar Google reviews one of them which came in by the way because the tenant felt we did an incorrect security deposit withholding you can look at listen to how we responded uh to those go listen to that podcast on how to take care of bad reviews when they come in whether they're legit or not pmu.com my friends until next time and as always I wish you success

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