Security deposits are not a legal requirement in Hawaii, but if you decide to take one then you must comply with the law and regulations that surround it. As a landlord, taking a deposit is a good way to protect yourself from situations like tenants that have failed to pay rent.
But how much should you charge and what other protections does this afford you? There are strong regulations in place that protect renters in Hawaii, but it's not always so clear-cut when the lease is coming to an end and the deposit is due to be returned.
Whether you manage your own rental agreements or employ the help of a property management company, here is what you should know about security deposits.
1. How Much Security Deposit Can You Charge?
The maximum amount that you can take as a security deposit is one month's rent. However, there are certain cases when you charge extra such as an additional deposit for pet owners - this can be up to an extra month of rent on top. Note that this does not apply to service animals owned by people with impairments, as they are not considered pets.
2. What Can and Can't Be Deducted?
As mentioned previously, the main reason for a security deposit is to cover unpaid rent should the situation arise. Other reasons for deducting from the deposit are:
- Cleaning costs
- Damage to the property including appliances supplied
- If the tenant quits or leaves the property before the end of the rental contract
- Damage to the property or furniture from a pet animal
- Any unpaid utility bills that the landlord provided separately from the rent
- Missing keys to the property, fobs or keycards for the garage, etc
Keep in mind that damages that are the result of normal wear and tear are not included in the list of deductible items.
What does "wear and tear" look like? In Hawaii, this refers to the normal degradation that happens to a property that is being occupied by a renter.
3. When To Return a Security Deposit in Hawaii
In Hawaii, the law states that any remaining security deposit should be returned within 14 days (from the end date as stated in the lease) along with a list of everything that has been deducted.
If you don't return the deposit within this time frame, then you will be liable to return the full amount of the deposit.
Can Security Deposits Be Used for the Last Month of Rent?
Security deposits can not be used for the last month's rent in Hawaii. But there's always a risk of renters doing this, especially if it's likely that they will not be getting their deposit back.
While the security deposit does provide a certain amount of protection for landlords, thorough referencing and credit checks can provide that extra layer of security. Not all landlords have the time for this, especially for people that run an extensive property portfolio.
If this sounds familiar to you, then a property management company can help. Why not get in touch today to find out how our property managers can assist you with the running of your rental properties?