Security Deposits Know How to Hold and Release Them

The GAR Lease is very specific regarding the obligations of Holders of Security Deposits for leased property. Compliance requires that the Holder adhere to multiple time limits for the preparation of Move-Out Statements and for the return of the full Security Deposit or deductions of funds from the Security Deposit.
 
The Move-In Inspection
Per the GAR Lease Agreement, a Security Deposit is not given until there is a Move-In Inspection, which includes a list of any existing damages to the premises.  Both the Landlord and Tenant must agree to the list of pre-existing damages and sign the Move-In Inspection.  The Move-In Inspection creates a base line for any change to the property at Move-Out.
Because there is often a time lag between the signing of a lease and the Move-In Inspection, it is common that the Tenant pay a Reservation Fee, which can be non-refundable, to the Landlord or Manager.  The reservation fee then converts to a Security Deposit following the delivery of the Move-In Inspection.  This has to be spelled out in the Lease.
If the Holder is a real estate agency like RMAA, the funds must be deposited within 5 banking days an into an escrow account.  The Security Deposit cannot be released to the Landlord or to the Tenant until there is a Move-Out Statement.
 
When is the Move-Out Statement prepared?
The Move-Out Statement must be prepared within three (3) banking days after the termination of occupancy. If all goes well and there is a satisfactory Move-Out Agreement
at the termination of the lease, the Security Deposit must be returned to the Tenant by the Holder within 30 days of termination.   
If the tenant terminates occupancy without notifying the Holder, the Holder may make a final inspection within a reasonable time after discovering the termination of occupancy. The tenant has the right to inspect the premises within five (5) banking days after the termination of occupancy in order to ascertain the accuracy of the Move-Out Statement. If the tenant agrees with the Move-Out Statement, the tenant signs. If the tenant refuses to sign the Move-Out Statement, the tenant has to specify in writing, the items on the Move-Out Statement with which they disagree within three (3) banking days. For all purposes herein, a banking day shall not include Saturday, Sunday or federal holidays.
 
What if the Move-Out is not satisfactory and there are damages to the property?
Deductions from Security Deposit: The Holder has the right to deduct the following from the Security Deposit: (1) the cost of repairing any damage to Premises or Property caused by Tenant, Tenant’s household or their invitees, licensees and guests, other than normal wear and tear; (2) unpaid rent, utility charges or pet fees; (3) cleaning costs if Premises is left unclean; (4) the cost to remove and dispose of any personal property; (5) late fees and any other unpaid fees, costs and charges referenced herein.
 
What if the Tenant abandons the property or does not co-operate with the Move-Out procedure?
If the tenant terminates occupancy without notifying the Holder, the Holder may make a final inspection within a reasonable time after discovering the termination of occupancy. The tenant has the right to inspect the premises within five (5) banking days after the termination of occupancy in order to ascertain the accuracy of the Move-Out Statement. If the tenant agrees with the Move-Out Statement, the tenant signs. If the tenant refuses to sign the Move-Out Statement, the tenant has to specify in writing, the items on the Move-Out Statement with which they disagree within three (3) banking days. For all purposes herein, a banking day shall not include Saturday, Sunday or federal holidays.
 
What If a Security Deposit is Dishonored?
If a SD is not honored, the Holder must notify all parties to this Agreement in writing. The Tenant then has three (3) banking days after notice to deliver good funds. In the event Tenant does not timely deliver good funds, Landlord has the right to terminate this Lease.