Our topic today at Independence Realty is security deposits. In Alabama, we have a landlord tenant act that dictates how security deposits must be handled.
You are not permitted to charge more than the equivalent of one month’s rent in Alabama for the security deposit. That means if your monthly rent is $800, you are not permitted to charge a security deposit that’s higher than $800.
Licensed real estate agencies must keep the deposit money in a state chartered bank escrow account. According to the law right now, you can keep the security deposit funds with your own if you’re an independent landlord managing your own property. As a licensed company, we are required by law to maintain two separate escrow accounts.
You can charge a deposit for pets, and there’s no limit to what you charge. We recommend that you get all you can. It’s difficult to get enough money for pets because most of our property problems and costs do come from pets. We tend to prefer tenants who have no animals. If we do rent to someone who has a pet, we do a pet audit. We go to the place where they have been living to see if the pet has done any damage.
Remember that market conditions always prevail, Just because you can take a full month’s rent as your security deposit doesn’t mean you can get that much. Many apartment communities are running specials where it only costs $99 to move in. That’s because there is so much vacancy. With important industrial developments through Remington Firearms and Polaris, we’re hoping the local economy improves and the rental market follows. A lower vacancy rate will really eliminate these security deposit discounts.
The most you can legally charge is one month’s rent, but if you need to run a deal and offer a security deposit that’s half a month’s rent, this will help you get good tenants into your house. Please contact us at Independence Realty if you need additional information.