Since the pandemic of 2020 began, the property management industry has been devastated by the executive orders, laws, and moratoriums that have prevented landlords from collecting rent from their tenants, resulting in many to go into financial hardships. Now, if you own rental property in the city of Atlanta, it is going to be more difficult to collect security deposits in the future.

On December 7th, the Atlanta City Council approved Ordinance 20-0-1423 without objection that requires landlords to give new tenants to pay their security deposits in installments instead of paying up front. 

The ordinance, sponsored by Councilman Amir Farokhi, requires landlords who own more than ten rental units to offer new tenants to pay more than 60% of the monthly rate for the rental. The landlord will then have to give the new tenant the option to cover the remaining balance to an insurance provider or pay the deposit in as many as three installments during the contract’s life. 

The problem is not on the tenant not paying the security deposit at the beginning of the rental period; they do not pay at the end of it instead. If there were any damages to the property when the tenant moved out, you then have to file a claim against that tenant’s insurance. Sure, you would say, “Karen, that is what they already do, right?” and you’re right, but this creates a lot more red tape for the landlord to get the money they are already due. 

My biggest concern is that the city of Atlanta is not understanding the affordability, savings, and purpose of the bill when it comes to not only the landlord’s point-of-view but the tenant’s as well. Since security deposits are, in some cases, based on the tenant’s credit scores, it could put the tenant in a situation where they can not afford to pay rent either. The initial payments to pay rent and the remaining balance of the security deposit could cause them to be behind in their monthly payments and evict them shortly after moving in. 

Another problem for the landlord is if the tenant decides to pay over the first three months, some prospects might not pay the other two months because it’s not considered rent. If they choose or cannot pay on time, it would result in our landlords having to pay more of their money to file an eviction and the tenant ends up in debt, which will affect their chances of buying a home in the future.

As CEO of Sovereign Realty and Management, supporting property owners is my priority. I take pride in taking care of their investment and setting the standard in residential property management.  If you want us to manage your property in the metro Atlanta area, CONTACT US today for a free consultation.