Nevada Latest State to Allow Apt. Owners to Offer Surety Bonds, Other Security Money in Place of Security Deposits
- Oct 06, 2009
Livingston, N.J.–A new law affirms that apartment landlords throughout the state of Nevada can offer a surety bond or a combination of a surety bond and other security money as an option in lieu of a traditional security deposit as required by the landlord. A.B. 512 revises provisions relating to security deposits for the rental of real property (BDR 10-921). Both a security deposit and a surety bond as a security deposit alternative provide for the protection of the landlord.
“Nevada is the latest state to update its landlord tenant laws and formally recognize that security deposit alternatives in the form of a surety bond benefit both apartment renters and owners,” says Dan Rudd, CFO and co-founder of SureDeposit, provider of security deposit alternatives for the multifamily industry. “SureDeposit has been offering its surety bond program since 2001 in states nationwide and has already helped renters retain more than $750 million of their hard-earned money that they have not had to sink into a traditional security deposit.”
More than 100 apartment communities in Nevada already offer the SureDeposit program, including those under management of USA Multifamily Management, Alliance Residential and Berkshire Property Advisors.
“The timing of this new provision is noteworthy because surety bonds as a security deposit alternative can greatly benefit both renters and landlords in the current economy,” says SureDeposit President Richard Schreiber. “Renters can dramatically lower their move-in costs at lease signing by opting to pay the lower cost surety bond premium instead of a larger, traditional cash security deposit which the landlord ties up in escrow for the duration of the lease term.”
For example, in Nevada, for $500 worth of coverage to the apartment community against losses due to skipped rent or damages that exceed normal wear and tear, the resident only pays $87.50 for SureDeposit’s surety bond premium as an alternative to the traditional security deposit.
“But this lower-cost alternative can also significantly reduce a property company’s bad debt and improve its net operating income (NOI) in the process. This is because the surety bond better protects the owner against financial losses than would a traditional security deposit, while requiring the resident to comply with the terms of the lease,” explains Schreiber.
At a time when property companies are also looking to attract more residents and improve their occupancy rates, Schreiber thinks security deposit alternatives can be a real win-win for the owner and renter alike.