Handling Security Deposit Returns | Las Vegas Property Management - Article Banner

Security deposits provide Las Vegas landlords with protection against financial damages resulting from tenant negligence during their use of the rental property. This can include repairs and cleaning, breaches of contract that cost the landlord money, and unpaid rent. You need to collect a security deposit in order to protect yourself. Even well-screened tenants can act unpredictably, and you want to have some money in the bank if rent isn’t paid, the lease is broken, or damage exceeding wear and tear is left behind.

Always collect this deposit before signing the lease and handing over the keys. 

Nevada landlords can charge up to the equivalent of three months’ rent as a security deposit, which should be returned within 30 days of the lease ending and the tenant moving out. If you don’t return it within that timeframe or you make unlawful deductions from the deposit, you may face damages up to the full deposit amount. 

The law around security deposits and your Las Vegas rental property is pretty specific. You can make deductions for physical damage, lease breaks, unpaid rent, and any other charge listed in the lease agreement.

In our experience as Las Vegas property managers, most tenant and landlord disputes arise because of a disagreement over the security deposit. We think it’s important that you know how to handle security deposits and how you can avoid conflicts with your residents and potential court cases. 

Las Vegas Security Deposit Limits 

Nevada law allows you to charge up to three months’ rent as a security deposit or through a surety bond if agreed upon by both landlord and tenant. A combination of both a security deposit and surety bond may also be used.

This is pretty simple math. If your rental amount in Las Vegas is $1,800, you can charge up to $5,400 as a security deposit. 

Just because you can collect up to that amount doesn’t mean you should. 

A lot of different rental properties offer some attractive incentives to tenants. Apartment communities, for example, may offer a low $500 security deposit to draw tenants to their communities. If the market is competitive and you’re working hard to attract good tenants, you might want to settle for collecting a security deposit that’s simply the equivalent of one month’s rent. This will usually cover you for the potential damages a tenant can cause. 

If you’ve approved a tenant who has some issues in their credit or financial history, you might want to charge up to three months of rent. Someone with evictions, for example, is a greater risk and would require a higher security deposit.   

Nevada law allows you to ask for an additional pet deposit, which is usually a flat amount or a nominal amount that is charged per approved pet. Remember that this applies only to pets, not to service animals or companion animals. 

Additional Security Deposit Details

Some states have strict laws that govern where a security deposit should be held and how. Nevada is a bit more permissive. Here are a few things you need to know, however:

  • If your lease agreement provides for a nonrefundable charge for cleaning, you can legally require that. However, any other deposits, including the security deposit, must be refundable. No rental agreement may contain any provision as nonrefundable or wave or modify a tenant’s rights. Any such provision that relates to a nonrefundable security deposit shall be considered as void.
  • You do not need to hold the deposit in an interest-bearing account, nor do you need to pay interest to tenants when the deposit is returned. 
  • You are required to hold the deposit in a separate trust account. Just make sure you have the accounting in place to demonstrate where the security deposit is held and how much it’s for.

Collecting and holding the security deposit is usually the easy part. Things can get more complicated when it’s time to return it.

How to Apply the Security Deposit

You have 30 days to return the tenant’s security deposit. If you’re not going to return the deposit or if you’re only returning part of the deposit, you’ll need to make an itemized list of those things that you’re using the deposit to pay for. There should be receipts or invoices to document what was spent, and why. 

Security deposit deductions can become difficult. As the owner of the rental property, you need to understand what you can charge the deposit for and what you cannot charge the deposit for. Sometimes, the line seems very thin. 

Here are some of the things you can and cannot use a Las Vegas security deposit for:

Reasons to Withhold Money from a Security Deposit

  • Charge the security deposit for unpaid rent

You are permitted to apply the tenant’s security deposit to any rent that has not been paid. Maybe the tenant didn’t pay for the last month at all, or perhaps they missed a month earlier or they didn’t pay the complete amount the last couple of months and never caught up. Use the security deposit to bring the account current after the tenant leaves. 

You don’t want to encourage incomplete or late rent payments, of course. The deposit isn’t meant to cover rent during the tenancy. Don’t let tenants use the security deposit as the last month’s rent. The deposit isn’t meant to replace it; you can simply use it at the end of the lease period to pay for any past due rents.

Using the deposit to pay for rent when tenants break the lease and leave the property suddenly and without notice is also permissible. The deposit, in this case, can make up for the income you’ve lost. 

  • You can put the deposit towards cleaning costs

Your tenants should understand that you expect to receive the property back in the same condition that it was when they moved in. Especially in terms of cleaning. You’ll want to be specific about what kind of cleaning you expect before a tenant vacates. 

If the tenants move out and you find that there’s trash left behind or not everything has been moved out, you will have to pay to make the rental home appealing to new tenants. The security deposit can help cover any cleaning costs that should have been your tenant’s responsibility

  • Property damage caused by tenants or tenant guests

Property damage can be caused by abuse, misuse, and neglect of the property. It clearly goes beyond wear and tear. While small nail holes cannot be deducted, large holes in the walls or floors can absolutely be deducted from the security deposit. Scratches on the floor or stains in the carpet are examples of damage. If a refrigerator no longer works because an occupant or visitor was hanging on the door, that’s a repair you can deduct from the deposit. 

Las Vegas Rental Property Wear and Tear 

Normal wear and tear is your responsibility as a landlord. You cannot charge a tenant’s security deposit for those small nail holes in a wall where paintings or pictures were hung. You cannot charge for the scuff marks on the floor or against the wall where furniture sat for a year or longer. Caulk in the tiles is likely to chip away or grow mold and you’ll have to deal with that at your own expense. Paint will fade and doorways will get chipped. The security deposit is not fair game for these costs. 

Returning a Las Vegas Security Deposit

Security DepositThe security deposit law in Las Vegas and throughout Nevada states that landlords, owners, and property managers must return the deposit to their tenants within 30 days from lease termination, or when those tenants leave the property.

In any best case scenario, you have had excellent and responsible tenants who took care of the property and left it looking great. In that case, you can return the full deposit and it likely won’t take you 30 days to do it. Before your tenants leave, ask for a forwarding address. Send the deposit back as quickly as possible. 

You may have some deductions to make from the deposit, however. In this case, you’ll have to provide a written statement and itemized list of what you’re deducting and why. If you fail to send this accompanying statement with a partial refund or no refund, you forfeit your claim to the amount of the security deposit you were trying to withhold.

Protect yourself by carefully documenting the condition of the property before the tenant moves in and after the tenant moves out. This will clearly demonstrate what things looked like before the resident took possession and after. It could keep you out of court. 

Security deposits can be difficult, but they don’t have to be. Professional Las Vegas property management can always help, and we’re here if you have questions. Please contact us at New West Property Management. We’re passionate about the services and value we provide to the owners and investors who trust us with their properties. Our team expertly manages residential rental homes in Las Vegas and throughout Clark County, including Henderson and North Las Vegas.