If you want to rent a room out for extra cash, it is up to you to decide whether to require a security deposit. There is no right or wrong answer when determining if a security deposit is necessary. As a landlord, it is your personal decision. If you are concerned about potential damage to your home, then you should charge a deposit. However, carefully screening your tenants can eliminate the need for a security deposit.
Laws on Deposits
There are no laws requiring you to charge tenants a security deposit. If you do choose to require a deposit, check your state laws. Some states require you to keep the money in an escrow account. Regardless of what you call the security deposit, any money collected from the tenant at move-in beyond the first month's rent is considered a deposit. In Connecticut, the law requires landlords to keep any security deposits in separate accounts in a Connecticut bank. Deposits from different properties can't be co-mingled in one account. In contrast, California has no law requiring landlords to keep security deposits in a separate account.
Checking on the Home
Unlike renting a home to a tenant, you are able to supervise what goes on inside the home. If you notice damage, such as a broken door knob or a hole in the wall, you can ask the tenant to make the necessary repairs or ask him to move out of the home. Since there are usually common use areas, you have the opportunity to view the majority of the home on a regular basis to ensure the home is kept up to your standards. If the tenant does not pay rent, you may evict him. The eviction process varies, but it typically requires filing a notice at the local courthouse and delivering a copy to the tenant.
Amount of Security Deposit
Some states limit deposits to one month of rent, others allow owners to require a deposit equal to two months of rent, and one -- Nevada -- sets a limit of three months of rent. Still others set no limit.
Screen tenants to make sure you find someone who will respect your home. It is crucial to know who you are inviting in your home. Perform a background check and credit application on prospective renters. Require an application fee to cover the cost of the screenings. If the background and credit checks scare away an applicant, you wouldn't want him in your home anyway. Even if you decide not to charge a security deposit, set clear house rules to ensure you are on the same page.