Security Deposit Laws

A security deposit agreement is a deposit given to a landlord by a tenant to cover damage to the premises caused by the tenant and to protect the landlord in the event the tenant does not pay the rent.  A security deposit is usually equal to one month's rent, but may be more than or less than the first month's rent. There is no specified amount in security deposit law.  A security deposit should not be confused with advanced rent payments (first month's rent or last month's rent), which are illegal in some states, or the application fee. When you submit a security deposit, you have the right to get all security deposit interest if the landlord doesn't need to fix or clean anything in the apartment.

If you have a pet, you may be required to pay a pet deposit.  The rules for pet deposits are the same as those for security deposits.

Laws and Regulations

Security deposits are typically required on leases of one year or more.  The rental agreement should state the amount of the security deposit so that there is no confusion between the parties.

The laws governing security deposits vary from state to state and set forth the types of bank accounts in which security deposits must be placed, the amount of time a landlord has to refund a security deposit, and the procedures tenants must follow to demand a refund of a security deposit. There is no security deposit form, it is as simple as mailing a check to the landlord.

Common Security Deposit Violations and Disputes

In most states, a landlord must return the security deposit if the tenant has made all rental payments, returned the keys, and left the premises in the same condition it was in when he rented it, barring normal wear and tear.

Disputes between landlords and tenants arise because the term “normal wear and tear” means different things to different people.  Nevertheless, if the apartment is left clean and without major damage and the tenant has returned the keys, the landlord should refund the security deposit.  If the landlord takes deductions from the security deposit to cover repair costs, most states require him to provide the tenant with a detailed itemization of the repairs.

Common security deposit violations made by landlords include:

  • Commingling security deposits with personal funds;
  • Failing to give the tenant a receipt for the security deposit;
  • Refunding the security deposit by personal check;
  • Accepting one check from the tenant for the security deposit and first month's rent;
  • Failing to refund the security deposit within the time specified by law; and
  • Failing to provide an itemization for deductions taken from the security deposit to cover repairs.

Penalties

The penalties for security deposit violations can be severe.  In some states, if a landlord wrongfully refuses to return a security deposit, he may be ordered to pay up to three times the amount of the security deposit as well as the tenant's court costs and attorney's fees.

Avoiding Disputes

To avoid security deposit disputes, know what the lease says and know the law in your state.  Make sure to thoroughly inspect the premises before you move in and after you move out.  Take pictures of the premises before you move in and after you move out.  Attend the walk-thru with the landlord or property manager after you move out.

Whether you are a landlord or a tenant, if you are embroiled in a dispute over a security deposit, you should contact an experienced landlord-tenant attorney.

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