As a landlord one of the most common problems that you may face is the possibility of renting to someone who may have great references, a full-time job and seem like an awesome person but, they don’t have the money you require for a deposit.
Although you may have had to walk away from potential renters like this in the past who didn’t have the money that you required for deposit, there is a solution to this problem in the form of a surety bond.
What Are Surety Bonds?
Surety bonds are the least understood alternative to the deposit, but it’s also one of the most viable, because, a surety bond is actually a contractual promise to you that if your tenant fails to comply with the terms of your lease the bond company will be ready to compensate you up to the limits of the surety bond.
How Do Surety Bonds Work?
If you’re familiar with how the justice system works at all, when somebody gets arrested their bail can sometimes be set at anywhere from $1000 or more and, the person who is detained only has to put up about $100 or higher depending on the bail amount and if they are able to make bail at all.
The only catch with bail is that if the formerly detained person decides to skip town, or skip the hearing, they will have forfeited the bond and the bail company now has the legal right to go after them.
A surety bond functions exactly the same way. The tenant who is unable to pay the deposit but decides to go with the surety bond will be responsible for paying a deposit to the bond company of up to 20% of the total sum of the deposit.
Let’s say that a tenant decides to break or violate some terms of their lease, the landlord has the legal right to file a claim against the tenant which the bond company will be responsible for paying for, and as with the example of somebody skipping bail, if the former tenant decides to skip town and not pay the percentage of the surety bond then the bond company will go after them as well.
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For professional property management for your rental property contact Vestpro Residential Services today by clicking here to connect with us online or calling (832) 498-0016.