Getting tenants to pay their last month’s rent can be difficult-especially when the security deposit is equal to one month’s rent. Tenants tell the manager “just keep my security deposit instead.” But if you’re stuck applying the security deposit to last month’s rent, you have nothing left over to cover apartment damages and cleaning that would ordinarily come out of the security deposit.
You could file an unlawful detainer against the tenants to collect the last month’s rent, but that is time consuming and the tenants could vacate prior to a judgment. You’re better off getting them to pay up in the first place.
Many tenants genuinely believe that the security deposit is the same as last month’s rent and find nothing wrong with substituting one for the other. To educate tenants, make it clear from the onset that the security deposit is not rent, that it will not be applied to rent, and the tenant must pay full monthly rent on or before the first day of each month, including the last month of the lease term.
Civil Code § 1950.5 makes it clear that the security deposit is not rent. Even though the security deposit may later be used to cure defaults in rent, it may not be used by the tenant as rent before they move out. But, you must make your tenants understand this rule. To help out, don’t make the security deposit exactly one month’s rent.
Review your security deposit policy with tenants before they move out. Upon receipt of a thirty day notice, a conference should be held with a tenant advising them about the security deposit and move-out procedures. A letter that reminds the tenants of your policy is a good idea.
If you are certain the tenant will vacate the premises as promised and leave the apartment in good condition, you could always agree to let them apply the security deposit against the final month. But there are no guarantees. That’s why we recommend against this. Among other things, it might be difficult to find the ex-tenants to serve them with a small claims once they vacate. For tenants who refuse to cooperate, a three day notice may be served and unlawful detainer filed. By following the above steps, you can minimize the problem of tenants using the security deposit as last month’s rent.