real estate

How rent increases affect deposits

Steve McLindenQuestionDear Real Estate Adviser,
When you pay first and last months' rent and a damage deposit on a rental unit and then your rent goes up each year, do you have to pay the difference in that last month's rent or deposit when you give your notice?
-- Clair D.

AnswerDear Clair,
You may have to pay the difference, depending on your state's law, how your lease language reads and how your landlord has addressed the issue at the time the monthly rent was raised. In many states, the landlord can require the tenant to increase both the amount of the last month's rent and the amount of the security deposit to equal the sum of the new rent.

However, if a landlord increases the rent without immediately requiring the tenants to match that amount in the deposit or last month's rent, the landlord typically can't collect that money when the tenant moves out. Moreover, many states require landlords to place both that last month's rent and any security deposit in interest-bearing accounts with the interest payable to the tenant either annually or at the cessation of the lease. So there's a pretty good chance you may be due interest money but not have the obligation to pay extra for that last month!

Typically, landlords also have a specific period after a tenant moves to either return the full security deposit or present itemized written notices of any damages or rent arrears to which it has been applied and then enclose any remaining amount of the security deposit. In Florida, for example, that period is 15 days from the rental agreement's termination but only if the landlord doesn't intend to impose a claim. If a landlord does plan to make a claim there, a written accounting of it must be sent by certified mail within 30 days to the departing tenant after the lease agreement ends. If the landlord doesn't send the notice within 30 days, the landlord forfeits the right to impose such a claim there unless the tenant failed to give proper notice.

It is important for renters to keep all deposit and rent receipts plus copies of any agreements made with the landlord and other correspondence. Landlords taking over a property may sometimes claim they didn't receive monies from the previous landlord even though it is their legal responsibility to square this with the previous owners and property managers.

Make sure you get every dime due to you. Good luck in your move!

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