What is SureDeposit?
SureDeposit is a risk management and marketing program for the multifamily industry that improves upon refundable security deposits by replacing them with a surety bond. SureDepositís surety bond protects a property against financial losses due to lease violations, while lowering residentsí move-in costs.
The first of its kind, SureDeposit is the market leader in the security deposit alternative market, with more than one million apartment units under agreement in nearly 3,500 communities nationwide. Since its inception in 2000, SureDeposit has replaced over $750 million in refundable security deposits.
How Does SureDeposit Work?
At lease signing, the resident is offered a choice between paying a refundable security deposit to the property company or a one-time, non-refundable surety bond premium to SureDeposit. The bond premium equals a fraction of the cash outlay of a refundable security deposit. For example, the minimum coverage amount for the community of $500 costs the resident $87.50 for the SureDeposit bond premium.
If the resident meets his rental obligations and returns the apartment in good condition, he moves out without any further obligation.
If the apartment incurs physical damages beyond normal wear-and-tear or monetary damages due to skipped rent at move-out, the property company submits a claim to SureDeposit for payment. SureDeposit then collects reimbursement for the claim from the resident, who, under the terms of the bond, remains fully liable for his lease obligations.
Coverage purchased with one premium payment at lease signing applies for the life of a residentís lease and follows the resident to any participating apartment within the property companyís portfolio.
How Do Property Companies Benefit?
As a marketing tool, SureDeposit allows property companies to attract residents with the prospect of lower move-in costs.
As a risk management tool, SureDeposit provides better coverage than a refundable security deposit would provide to the owner to offset financial losses due to damages or skipped rent, something particularly important when requiring small or no security deposits is the norm. As a result, a property company can significantly reduce its bad debt and improve its net operating income (NOI).
Property companies that implement SureDeposit in markets with low or no security deposits can also raise their minimum refundable security deposit requirements to a level that better protects them against losses because prospective residents have the option of paying for SureDepositís lower cost surety bond instead of the higher refundable security deposit.
How Do Residents Benefit?
Any resident that is qualified for the community is eligible to purchase SureDepositís surety bond and automatically approved without additional screening.
SureDeposit allows residents to pay less money up front at lease signing. By freeing up cash that might otherwise have been tied up for the duration of their lease term in a refundable security deposit, residents that opt for SureDepositís security deposit alternative can reduce their move-in costs and find better uses for their money when they need it most.
In apartment communities where the SureDeposit program is currently offered, nearly 80% of incoming residents enroll in the program.
Who Underwrites SureDepositís Surety Bonds?
SureDeposit is underwritten by Fidelity National Property and Casualty and by Bankers Insurance Group.