Security deposits


Does anyone know if there are “rules” governing security deposit collection. The park is in Texas, and most of the security deposits that have been collected were from years ago when the rents were much cheaper. I would like to update those, as well as collect current ones on all the others.

Anyone see any snags to this?


Most MH parks that I am aware of do not charge a lot deposit. We do not have any deposits for our mobile home parks that we have in Texas.


I sure as heck plan to charge security deposits. You know you are going to have to evict some people and you’re unlikely to get anything out of them. Why not have some “cushion” upfront? Besides, I have had inquiries from potential residents (and I haven’t even closed escrow yet!!!) and every one of them has no problem with putting up a deposit.


Security deposits are controlled by your lease. If you wished to change the amount of the deposit you would do so at a lease renewal. I would however caution you that if you have had tenants for long periods of time who have a small deposit because of that time then leave them alone. They have earned the trust of the park. Asking them for more of a deposit will only cause bad will against you and likely cause you to either loose good tenants or turn them into bad tenants all over a complete non-issue.

The reason we collect security deposits is to help us offset the bad tenants. If these tenants have proven good over all these years then there is little need to raise their deposits. I would much rather have a proven tenant with little or no deposit then gamble on a new tenant with a full deposit.

The security deposit is not yours to spend and I suspect most if not all states require you to keep it in a separate escrow account that is not co-mingled with your personal or business funds. As such this money is really not something you need to focus on. Focus on making sure that the rents themselves are close to or at market once you own the park (hopefully they are below market when you buy).

As new tenants move in you can begin requiring the higher security deposit but leave the old tenant’s deposits as is.

Tony Colella

Thanks so much for your info, everyone.

Here in Michigan security deposits are very common for mobile home park spaces. State law caps what communities can charge at 1.5 times the base rent for that space.

Most parks charge the max allowable so with mid $400 average rents we often see security deposit amounts in the mid-600 range. Add to that the first month’s rent and most parks require over $1,000 just to move in. That’s in addition to the $1,000 minimum I usually ask for when selling a home.

In our economy right now, people with $2,000 plus in cash are rare. In my opinion this security deposit issue causes more harm than good because it puts home ownership out of reach for many people who could otherwise possibly afford it.


Jeff I totally understand the financial frustration a lonnie dealer faces when trying to find a buyer who can afford lot rent, security deposit and a down payment on the mobile home. The Lonnie dealer often ends up with the short stick and small deposit because of it.

However as the park owner (which I believe was Diamaria’s perspective) you have a totally different point of view. Just like the Lonnie dealer wanting the largest down payment to protect their investment, the park owner wants a security deposit to protect theirs.

Typically the lonnie dealer has less exposure than the park. A home abandoned in a park can tie a lot up for many months (not all states are easy to obtain an abandonment title, nor do they make it easy or possible for the park owner to hold a lienholder, if there is one, responsible). If the park has to move the home it will costs a grand or more. If they get possession of the home they will no doubt put money into repairs etc. etc.

Typically the tenant bolts only after falling more than a month behind and they will view the deposit as last month’s rent anyways.

I don’t think it necessary to charge 1 1/2 times the rent but a full rent deposit is fair and honestly would not help a whole lot if the home is abandoned or the tenant evicted. It does help the tenant’s motivation if they are working with the park to handle a change in their finances or a need to move and that money is still important to the tenant.

Most park owners are not lonnie dealers, nor are they familiar with them but if the park had a lonnie dealer on the hook for that lot as well then perhaps you could argue that a deposit of that size isn’t necessary. This will not work with all park owners but if you have a good relationship you just might find a willing partner.

Tony Colella

Hi Tony,

My point was not to complain about the situation I am facing but rather to shed some light on the negative effects that large security deposits can have on park occupancy levels.

I guess if a community is mostly full and rent is being paid on most lots then the security deposit is not having this negative effect. The situations I’m referring to are when there are many willing buyers but that extra $700 puts the home just out of reach, yet there are many empty homes or open spaces in the park. If I owned the park, I’d be lowering the security deposit (or somehow, the total move-in cost) to reach the equilibrium point where the people who want to live there (and are credit-worthy) can afford to move in.

There are many considerations to be sure and I don’t mean to make it sound like that’s always the right answer. I just think it may not be wise, in every circumstance, to say “we want the maximum security deposit allowed by law” without taking a hard look at your target customer and what they can afford. The amount of cash a person has in their hand on move-in day, in my experience, is not always the best measuring stick of what type of payor they will be.