| Why Security Deposits Matter

Security deposits can be a touchy subject between landlords and their renters. In South Dakota, landlords are able to hold up to one month's rent and if there are other circumstances in play such as repeating negative landlord history or property damage regarding past rental properties existing on a criminal background check, they can hold more.

This newsletter is going to highlight the key importance of Security Deposits for a landlord and a tenant, explain timelines of security deposit return, and touch on the main reasons for security deposits to be withheld after tenancy.

A Security Deposit, also known as a damage control fund, is often withheld upon move in to account for damages that may occur during tenancy, these damages can be physical or financial. Security Deposits are held in reserve accounts, separate from revenue accounts, and are often refundable upon move out pending lease agreements.

It is common for a security deposit to be required upfront as gesture of serious interest. There are infinite reasons as to why an applicant would withdraw their interest at the last moment. Unforeseen health problems, legal issues, lack of funds, changes of circumstances, and the list could go on. Although these examples in themselves may be justifiable, it pushes the property into extended vacancy. The landlord is now losing money because the property is not filled, and the tenant selection process has to continue.

Upon moving out of your rental property, ensure you review your lease agreement and highlight all spaces you are expected to clean before moving. This will avoid extra cleaning fees. Be aware that if your rental property has carpet, you will be expected to have the carpet cleaned, and in some cases, management may prefer getting the carpet cleaning through a professional. Notify management right away if you have plumbing or electrical problems to avoid being charged for water damage, and lighting problems.

The State of South Dakota has a codified law that states security deposits and/or correspondence regarding security deposits must be sent AND received by the past tenant within 45 days of the official move out date. If your security deposit is being withheld a landlord must provide a written statement showing what the security deposit was used for upon move out.

Main Takeaways:

1. Security deposits are a necessary precaution to avoid profit loss. 
2. This mutual agreement between resident and landlord keeps a respectful motivation for property upkeep
3. Correspondence regarding security deposit(s) after move out IS REQUIRED within 45 days of the move out date.
4. As a renter, it is important to review your lease and take note of your expectations as a tenant at your property.