Security Deposits Landing Local Landlords in Big Trouble

security deposits for landlords

There’s a lot more to property management in Worcester County than keeping up with building maintenance and rent collection. Massachusetts has enacted tough landlord tenant laws to protect renters, which put complicated bookkeeping burdens on investment property and tenants have become better at working the system than ever.

There’s a lot more to property management in Worcester County than keeping up with building maintenance and rent collection. Massachusetts has enacted tough landlord tenant laws to protect renters, which put complicated bookkeeping burdens on investment property and tenants have become better at working the system than ever.

Malicious and Educated Tenants Take Advantage of Worcester Landlords

The tough economy and foreclosure crisis have spawned even more professional tenants who are purposely out to not just get free rent but milk every penny they can out of local landlords.

They know the system and will set up DIY landlords who have failed to take advantage of full service property management. Tenants know these mom and pop investors are easier targets and routinely victimize them.

They know the laws and set up landlords to take the fall and with new regulations siding with renters over property owners can often make a serious profit from swindling them, often walking away with several times the security deposit in cash.

Whether you are leasing multi-family property or single family homes you probably already know to stay away from anything which appears to be discrimination and how to be careful about evicting tenants but even seemingly small things like collecting and holding security deposits can land landlords in serious trouble.

Common Issues That Trip up Massachusetts Landlords

Many individuals are rushing to invest in real estate today in order to cash in on the market and simply don’t realize, that even by copying others they could be breaking the law and setting themselves up for disaster.

There are actually volumes of illegal practices listed which can trip up those renting out Mass. properties. One of the most common and overlooked is requesting illegal fees at move in. There are actually only 4 items which landlords can legally collect for under the law and savvy tenants can move in and then deduct any illegal fees paid from rent without fear of retribution.

Most are probably aware of the requirement to pay interest on security deposits but many are not aware of the strict demands regarding keeping these monies in separate accounts which are “protected from creditors”, having to disclose the account numbers to tenants and  the frequency of receipts needed to be delivered.

In fact, for those without professional full service property management the whole process is a minefield waiting to explode from running ads for renters, to drafting leases, what can be held when a tenant moves out and what can’t. Those who slip up face having to immediately return security deposits and being liable to pay out 3 times the amount of the deposit or possibly much more.

Before You Start Shredding Your Records…

Before you begin shredding the evidence of you past missteps know that you must maintain records for 2 years, even after a tenant moves out, which must be readily available to be produced on demand. If you can’t produce these bookkeeping records or refuse to, that will also cost you in penalties.

All of this together with the tough lessons in property management Worcester County property owners have recently learned from hurricane Sandy means it only makes sense to seek the help of a full service professional property management firm, in order to protect assets, income and investment returns.