Tenant screening is a great way to protect your rental property investment. Yet, it's not a foolproof solution to avoiding bad tenants. Security deposits provide an extra layer of protection for Woonsocket, RI landlords.
However, you need to follow the laws in Rhode Island regarding security deposits. Keep reading to learn what you need to know.
Security Deposit Amount
Rhode Island restricts how much a landlord can charge as a security deposit. The maximum deposit amount is equal to one month of rent.
So, how much is a security deposit? If the rent amount is $1,000, the maximum amount landlords can charge is $1,000.
Landlords can also request a pet security deposit to combat rental property damage. There is no limit to how much you can charge as a pet security deposit but it's important to be reasonable to keep tenants happy.
The Fair Housing Act prevents landlords from requesting security deposits for tenants with service or emotional support animals.
If these animals damage the property, the pet owner is still responsible for paying for these damages when they move out.
Security Deposit Storage
Some states dictate how landlords must store security deposits, but Rhode Island is not one of them.
A Woonsocket landlord can store security deposits with other rental property funds if they choose. However, it's good practice to keep security deposits in a separate account to make rental property accounting easier.
Landlords don't have to give tenants a receipt or interest accrued on the security deposit.
A property management company can help you choose the right storage method for your business.
Security Deposit Deductions
Under landlord-tenant law, security deposits can be used to pay for possible damages once a tenant moves out. These deductions are beyond normal wear and tear and may include:
- Unpaid rent
- Cleaning expenses
- Trash disposal
- Unpaid utilities
- Damages due to tenant negligence
Landlords must return the security deposit with or without deductions 20 days after the end of the lease. If you make deductions, include an itemized list of the deductions.
Completing a rental property inspection before and after the tenant moves out can make the deduction process more effective.
Landlords who don't return the security deposit must report this as taxable income during tax season. The security deposit is not income if you return the full amount to the tenant.
General Wear and Tear
One of the main landlord responsibilities is knowing what counts as general wear and tear. Wear and tear is defined as the natural deterioration of a property that occurs from regular use. Some examples are:
- Faded paint
- Faded carpet
- Dirty grout
- Scuffed floors
Deductible damages are only those that occur from misuse, negligence, or an accident.
Handling Security Deposits in Woonsocket, RI
Security deposits can protect landlords from bad tenants. It's important to collect deposits and stay compliant with the law. For help, work with PMI Ocean State!
Our property management team has years of knowledge and experience to help Woonsocket landlords collect, store, and return security deposits.
Our local knowledge of the real estate market comes in handy in all aspects of management. Ready to get started? Contact us today to learn more about our services.
