Security Deposits

A security deposit is any deposit a tenant gives to a landlord and includes the last month’s rent, cleaning deposits, key deposits, and pet deposits. A majority of states set a limit on the amount a landlord can charge for deposits, usually ranging from one to two months rent. Some state laws and local ordinances require a landlord to pay interest on deposits held or to place the deposits in a separate interest-bearing account. Most states require the landlord to give the tenant a written receipt for all deposits paid, and some require landlords to provide tenants with lists of existing damage on request.

The landlord can keep a deposit to recoup unpaid rent or for damage to the property caused by the tenant, and in some states for cleaning expenses. Damage to the property does not include ordinary wear and tear. Factors such as the number of people living on the premises, permitted pets, and the length of the tenancy are considered in determining what deterioration of the property was caused by ordinary wear and tear.

If part of the deposit is called the last month’s rent in a written agreement, the tenant can apply that amount to the rent for the last month of tenancy. If the deposit is not specifically for rent, the tenant is required to pay the rent for the last month and recover the deposit after moving. When the tenant moves, several states require the tenant to provide the landlord with a new address in order to receive notices or return of the deposit.

The landlord must inspect the premises for damage. In some states the tenant has the right to request this inspection be done before the tenant leaves so that the tenant can repair any damage the landlord identifies. Many states require the landlord to give the tenant a written itemization of reasons for retaining the deposit and written proof of costs such as receipts and estimates. These must be provided to the tenant within the time period specified by state law. Failure to comply with these laws can result in severe penalties in some states.

If the rental property is sold while the premises are rented, the new owner is responsible for obtaining deposits from the former owner and returning deposits to tenants.

For FAQ about Landlord/Tenant Law, visit the Free Advice website or ask a question about your landlord-tenant issue on our Free Advice Law Forum to see how others have handled similar situations.

Check out these related articles:

How Much a Landlord Can Charge for a Security Deposit

How Security Deposits are Held

Getting Back Your Security Deposit

Inspection of the Premises

Returning Security Deposits

Tenants’ Privacy and Landlords’ Access

State Laws: Landlord/Tenant