6 Basics of Security Deposits for Your Rental Property
In Ibiza we’ve heard so many times about landlords who get their properties returned in very bad shape, this is why it’s so important to collect a security deposit. It’s recommended to do it to protect you if your tenant causes damage to your property or fails to pay the rent.
Here are six security deposit basics every landlord should understand.
What Is a Security Deposit?
It’s a sum of money that you collect from your tenant in addition to their first month’s rent. It’s a one-time fee that is refundable.
How Much Security Deposit Should You Ask For?
By law, you can collect a deposit corresponding to the value of the monthly rent. At the moment the law does not state what is the maximum amount that you can charge.
When Should You Collect the Security Deposit?
It’s always advisable to collect the entire security deposit before the tenant moves into the rental. If a tenant is not able to provide the full amount up-front, either you should not allow them to move in until they pay or you should find another potential tenant who is able to provide the entire security deposit. Keep in mind that if you allow a tenant to move in without paying the security deposit, you are putting yourself at risk.
How Do You Store It?
In Ibiza, you must deposit the sum with IBAVI (Institut Balear de l’Habitage Govern de les Illes Baleares) within 30 days from the stipulation of the rental contract.
When Must You Return It?
You must start the process to release the deposit immediately when the tenant gives back the key to the property and you both sign the “end of contract” document. Keep in mind that if you exceed the terms, unless there is a good reason for not returning the deposit, you can be legally prosecuted.
What Is a Security Deposit Used For?
Bear in mind that it’s not recommended to use the deposit as payment for the last month of rent the purpose of a security deposit is to ensure that you will get back your property in good condition. This is why this amount can be kept if there are serious damages to the property (over and above the normal wear and tear), nonpayment of rent, or missing payments such as electricity bills, water or gas, as well as telephone or internet.