Is it against labor laws or illegal to allow a potential tenant to perform work in lieu of receiving a security deposit from them. After the lease expires will you have to pay them for thier work? ???
i have done this before, i hope it isn’t illegal…it never crossed my mind that it would be
You’re dealing with separate issues. Security deposit is a security deposit. It is a deposit of funds held by the landlord and maintained for the benefit of the tenant unless there is a breach of your agreement with them.
You really shouldn’t be playing with that unless there is a specific written agreement between you and the tenant.
AND there are specific consequences for messing with deposits… even triple damages… althoughI have never heard of anyone getting bagged this way. It is crystal clear in most states landlord/tenant laws.
Income is income.
It is customary to deduct labor charges off rent if a tenant performs work on their unit. Have you considered this option? Then you have a valid expense for tax purposes.
Is the work being done unrelated to the unit? That is different.
If he is waxing your car in lieu of secuirty deposit, that’s just kind of hard to justify.
I recommend not playing with the security deposit.
The work was painting the interior of the house and pressure washing the exterior and staining the porch steps. so it was related to the unit.
The tenant told us that he could not afford to pay the first months rent and a security deposit; and he asked if he could do it and we said yes without consulting with our property manager and now she is saying that we would would have to pay him for work performed if we chose not to renew his lease.
Also we did have a written agreement which expired before he completed the work. When the lease was about to expire and we told him he would have to remit a security deposit. He was outraged and the property manager told us that we should renew the lease we no additional charges because of labor laws. ??? I wasn’t sure so we renewed. :-\
I would have required the security deposit and lowered the first month’s rent. But, knowing this, you may have trouble down the line because this person is living hand-to-mouth and is just a few sick days away from “I can’t pay the rent this month, do you have some work I can do instead?”.
Keith
unfortunately, we have already been given the, “I’ve been in a car accident and I don’t have it this month line”. i did NOTwant to renew, but the property manager made me feel like I could be on the hook if I didn’t.
Rea,
I always make try to make things an “arms length” transaction. Pay them for doing the work and then have them pay you for the security deposit. That should avoid the labor laws situation. The money goes back and forth and there is a clear paper trail.
DB