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Should You Handle Your Tenants Funds?

Should You Handle Your Tenants Funds?

 

By RPM Central Valley

It doesn’t matter if you are new to owning rental properties in the Central Valley, or you’ve owned rentals for years, one of the top questions you should ask yourself as an owner is if you should be handling your tenant’s funds.

This question is important because every year more disputes occur between owners and tenant’s due to mismanagement of funds and those disputes could have been avoided if electronic methods were used to handle money used for security deposits and move in costs.

Handling Tenant Funds

Handling tenant deposits can be a more complicated subject than you might think. State laws vary when it comes to the amount, deadline for returning after your tenant vacates and the acceptable bank account types used for securing the funds. For example, Texas has very little on the books regarding the handling of a tenant security deposit. There is no maximum amount allowed for security deposits or for pet deposits. The only thing stated implicitly is that the security deposit must be returned within 30 days. However, in Pennsylvania, the statutes are lengthy and specific. As an example, a maximum-security deposit for the first year of rental cannot exceed two months’ rent and after the second anniversary of giving the deposit, the tenant is entitled to the interest earned. The property manager or owner must maintain a separate security deposit account, and after two years, funds over $100 must be deposited in an escrow account in a federally or state-regulated institution.

The laws governing rent payments vary from state to state as well, from whether or not a notice is needed for a rent increase to the maximum charge permitted for a late fee. In Arizona, for example, there is no notice required when raising the rent, but in Minnesota, the landlord must give written notice one rental period plus one day prior to the change. As late fees go, Maine allows a charge of no more than 4% of the rent amount and only if the landlord notifies the tenant at the time of the rental agreement signing. In Tennessee, late fees may climb as high as 10% of the rent.

Why You Should Handle Tenant Funds Electronically

You should start using electronic methods for handling tenant funds electronically because depending on the software you use you can count on an electronic paper trail being created that you can use to protect your best interests should disputes occur with your tenants in the future over deposit return.

Hire A Central Valley Property Management Company

At RPM Central Valley we use the latest property management software so that funds from tenants are all handled electronically and best of all this means that you can always count on getting paid on time without having to track down tenants and collect payment like you may have in the past.

To learn more about our property management services contact us today by calling (209) 572-2222 or click here to connect with us online.