Question: I just purchased a vacant property for rental income.  What should I consider, before I rent it out?

Answer: Last week’s column discussed legal requirements for handling a tenant’s security deposit, including a landlord’s duty to segregate, escrow and account for the funds.  Here, I explore a landlord’s ability to use security funds upon completion of a tenancy.

As a landlord, you must return a tenant’s security deposit within 30 days from the termination of tenancy.  However, situations exist where a landlord can keep some or all of the security deposit.Justifiably, a security deposit can be used toward unpaid rent.  Often, in cases where no last month’s rent is held, a tenant will instruct a landlord to use the security deposit to pay for the last month.  This one-sided arrangement benefits only the tenant, as the landlord is left without funds for potential damage repair which generally provides the greatest area of dispute among parties.

While security funds can be used to repair property damage, a landlord is not allowed to upgrade general wear and tear.  As a result, a thin line exists between keeping or losing security funds.

To best preserve your rights, a landlord should complete a property condition statement at least 10 days before the move in date.  This is accomplished by inspecting the property noting any damage and general property condition.  Obtain the tenant’s signed acceptance by allowing 15 days for rebuttal.  A diligent landlord also takes pictures of the property to accurately capture its condition.  In order to use the security funds toward repairs, a landlord must execute a sworn itemization of damages and provide a copy to the tenant with a bill or invoice.

If the tenant disputes the repairs, he may file a small claims action seeking a Court’s review.  In this situation, a landlord will benefit by having written proof, pictures and a general sense of reasonability.  For example, avoid the desire to upgrade the property using the tenant’s security deposit by replacing damaged household rugs with comparable quality, not expensive imports.

Next week’s column will explore common landlord mistakes, and recommend ways to avoid them.

Attorney James Haroutunian practice includes real estate and estate planning law.  Contact him with questions at the Haroutunian Law Office at 630 Boston Road, Billerica, Massachusetts. hlawoffice.com, 978-671-0711 or by email at james@hlawoffice.com.

Fraud, Crime, Hand, Security, Safety, Real Estate

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