An Alternative to Security Deposits?

By
Commercial Real Estate Agent with American Apartment Owners Association

Some Landlords Choosing Surety Bonds Over Security Deposits: But Will It Work for You?

by Bill Gray

As with all of my articles, this one is from the perspective of a landlord collecting tenant debt. Remember, I am on the back end of the deal, looking at damaged rental units and unpaid rent.

I will limit my comments about tenant surety bonds to my experience and how they affect debt collection after a tenant moves out.

What is a surety bond?

A bond is not a deposit. A surety bond is a product that a prospective tenant can purchase in lieu of a traditional security deposit. The bond is normally nonrefundable and costs significantly less than a security deposit, thus reducing the tenant’s move-in costs.  Read more...

 

Bill Gray is a tenant debt collection specialist. For tenant debt concerns, email him at Bill@thelandlorddoctor.com.

Visit Bill Gray’s blog at TheLandlordDoctor.com.

 

American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa.

 

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Rainmaker
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Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

VA statutes were changed several years ago to allow for surety bonds; however, I would never consider them for my clients.  I want the $$$ to repair the property or pay the owner and NOT have to wrestle with an insurance company who may not understand the LEASE their insured signed OR the state laws that allow me to charge them(their surety)

Since VA allows for interest on security deposits under the VRLTA, many multi-unit owners charge an up-front "redecorating" fee rather than a security deposit and require residents to leave the property "broom" clean.

Oct 28, 2009 02:56 PM #1
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Rainmaker
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American Apartment Owners Association

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