PropertyManagementMaven: 'Tis the $eason to Return Tenants' $ecurity Deposits..Do it like a PRO

'Tis the $eason to Return Tenants' $ecurity Deposits..Do it like a PRO

‘Tis the season to return security deposits and while many DIY landlords cringe at the thought of their departing residents not agreeing with their depo$it return, professional property managers have “tips” for doing it RIGHT.

NUMBER 1:  Whether your business is an LLC or a corporation, name your attorney as the “registered agent” with your state corporation department. When looking for the proper person to serve court documents on, state web sites are the first stop.  If the registered agent is an attorney it tells the plaintiff/tenant 2 things...1) since the registered agent is an attorney, their suit probably won’t go forward in Small Claims Court; and 2) that their landlord/property manager will be represented by an attorney....both good.


NUMBER 2: Have the departing residents provide their forwarding address to you on a size #10 business envelope...the only 2 times in the last decade that I have had to stop payment on a deposit return check, the tenant gave the WRONG forwarding address to me.  If they have to provide it themselves, there is no argument that it is their fault and I take a 20% service charge (allowed in my lease) for the process of stopping payment and reissuing a security deposit check.


NUMBER 3: Most states require an itemization of the deductions from the security deposit and while there are trade association (LAZY) forms available, I have my own form called 


MOVE OUT CLOSING STATEMENT * 2014 * Offer in Compromise


on which I itemize the deductions for CLEANING, YARD, REPAIRS, DELINQUENT RENT, LATE FEES, NSF FEES, NOTICE FEES and my 20% SERVICE CHARGE allowed in my lease.  At the bottom of the form, under my signature is the following:   


This check/statement is tendered as an offer in compromise for the settlement and return of the security deposit held on the Tenant/Payee’s tenancy.  This offer does not waive, relinquish or diminish the right of the Agent or Property Owner to seek additional monies should the Tenant/Payee reject this offer in any way including but not limited to the filing any legal action with regard to Tenant/Payee’s tenancy.


THIS WORDING is an Offer in Compromise meaning the departing tenant takes the check and cashes it or they HOLD the check UNCA$HED and sue me which brings them to NUMBER 1....and probably gets you a 1-STAR review on Google or Yelp.....don't worry, would-be clients will see that you will protect their property when you manage it and know that you are a PRO!



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Comment balloon 22 commentsWallace S. Gibson, CPM • August 23 2014 06:47AM


A word from Wallace means something...Good posting here and thank you

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) over 4 years ago


You're the pro.

All of what's written here is actually standard operating procedure for professional property managers.

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley,, MD & VA Homes and Real Estate) over 4 years ago

Wallace: To the point; and the record keeping must be current and concise with all receipts, however small with notes detailing the reason for the deductions and course of work with who completed it.

Posted by Sandy Padula and Norm Padula, JD, GRI, Presence, Persistence & Perseverance (Realty National) over 4 years ago

In VA....we don't need to provide receipts, etc. like CA...I have extensive move-out instructions and even provide perferred vendor one-page itemization is all I need and testimony in court about "business records' I don't need the repairmen there.

Posted by Wallace S. Gibson, CPM, LandlordWhisperer (Gibson Management Group, Ltd.) over 4 years ago

Good Mornin Wallace, I'm going to suggest to my husband that we name our attorney as our registered agent. Excellent advice.

Posted by Debbie Malone, From Lynchburg To The Lake (434) 546-0369 (Londeree's Real Estate & Property Management) over 4 years ago

Good morning Wallace,

You are the pro..I can see why so many want you to manage their properties!

Posted by Dorie Dillard CRS GRI ABR, Serving Buyers & Sellers in NW Austin Real Estate (Coldwell Banker United Realtors® ~ 512.750.6899) over 4 years ago


As always you have demonstrated your expertise in the property management field. I suspect there are many who do not follow the rules for their particular states, especially those who are not property managers.


Posted by Jeff Dowler, CRS, The Southern California Relocation Dude (Solutions Real Estate ) over 4 years ago

I always worry about owners trying to solve problems for tenants on their own, and dealing directly with tenants on security deposit issues. I know several agents that just won't do rentals/leases. It definately takes a professional like yourself to handle the many situations that can arise.

Posted by Jeff Pearl, Full Service Full Time Realtor (RE/MAX Distinctive / LIC in VA) over 4 years ago

In today's suit-happy society, it is important to use all the means at our disposal to assist our clients....if keeping out of court helps us help them, I'm all for it!

Posted by Wallace S. Gibson, CPM, LandlordWhisperer (Gibson Management Group, Ltd.) over 4 years ago

The security deposit is explained in the rental agreement I use.  The return is also.  There is a provision that it's the Landlord's take on the condition of the place at move out.  I love that!

Posted by Carla Muss-Jacobs, RETIRED (RETIRED / State License is Inactive) over 4 years ago

The rules for tenant and property is very well spelled out by the State of Florida in regards to security and cure. Really a no brainer.

Posted by Bill Reddington, Destin Florida Real Estate (Re/max Southern Realty) over 4 years ago

My point is that the landlord-tenant laws can be AUGMENTED to the benefit of the landlord/property manager by avoiding the potential for a lawsuit.

Posted by Wallace S. Gibson, CPM, LandlordWhisperer (Gibson Management Group, Ltd.) over 4 years ago

This is good information for those who have tenants who are moving out and how to handle the deposit.

Posted by Joan Whitebook, Consumer Focused Real Estate Services (BHG The Masiello Group) over 4 years ago

Wallace, it's a season for new leases for sure! And yes, landlords must do their due diligence.

Posted by Praful Thakkar, Andover, MA: Andover Luxury Homes For Sale (LAER Realty Partners) over 4 years ago

Wallace, you are the epitome of a professional. If I had investment property in your area, you would already be managing it.

Posted by Evelyn Johnston, The People You Know, Like and Trust! (Friends & Neighbors Real Estate) over 4 years ago

Sometimes doing the right thing means not just taking something for the sake of it and I admire returning the security deposits :

Posted by Laura Cerrano, Certified Feng Shui Expert, Speaker & Researcher (Feng Shui Manhattan Long Island) over 4 years ago

Wallace, thank you for the great tips. You are the property management expert on active rain.

Posted by Gita Bantwal, REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel (RE/MAX Centre Realtors) over 4 years ago

Hi Wallace.  You should write a book.  I would be the first buyer.

Posted by Conrad Allen, Webster, Ma, Realtor (Re/Max Professional Associates) over 4 years ago

Good morning Wallace. Your post is excellent and a well deserved feature. Your clients are very fortunate to be represented by someone as knowledgeable as you are.

Posted by Joe Petrowsky, Your Mortgage Consultant for Life (Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709) over 4 years ago

Excellent information that I, as non-property manager, wouldn't have known. Thanks for sharing.

Posted by Kat Palmiotti, The House Kat (Grand Lux Realty, Monroe NY, 914-419-0270, over 4 years ago

In the world of property management...they celebrate Wallace day

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) over 4 years ago

Acting within state and local landlord-tenant laws is a "given"; however, there can be ancillary policies and practices in place to enhance the odds against being sued...not everyone gets "Judge Judy" or "Judge Alex".....

Posted by Wallace S. Gibson, CPM, LandlordWhisperer (Gibson Management Group, Ltd.) over 4 years ago

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