A security deposit is a set amount of money that a tenant must provide a landlord prior to moving into the dwelling, and which is refunded at the expiration of the residential lease if there is no damage to the property.
Security deposits vary widely in amount, ranging from $50 to twice the amount of the rent. The security deposit can also be used to hold a dwelling until the tenant is about to move in.
There is some ambiguity when it comes to security deposits because both tenants and landlords fail to familiarize themselves with the laws concerning security deposits. Although these laws vary somewhat by state, the basics are typically similar.
Residential Lease Security Deposits #1: Amount
A landlord is given the right to charge whatever security deposit he or she feels is applicable. Although most tenants wouldn’t move into an apartment where the security deposit was $5,000, it is up to the landlord to decide this amount.
Residential Lease Security Deposits #2: Security vs. Pet
A security deposit typically does not encompass a pet deposit, which is usually at least partially non-refundable. A pet deposit is collected from tenants who have pets, and is kept for the purpose of cleaning any mess that might be left by the pets at the end of the lease. To avoid confusion, landlords should make this distinction in the lease.
Residential Lease Security Deposits #3: Using Up a Security Deposit
It is possible for a tenant to “use up” a security deposit at the end of the lease. This happens if the damage to the dwelling will cost as much as the amount of the deposit to repair.
Residential Lease Security Deposits #4: Additional Charges
If the damage to the dwelling costs more to repair than the amount of the security deposit, the landlord is entitled to collect the full amount from the tenant. Cleaning, repairing and other costs will be applied to a final bill, and any monies not remitted can be put into collections at the tenant’s expense.
Residential Lease Security Deposits #5: Interest
Many states govern this provision, but if not, the landlord can decide whether or not any interest accrued on the security deposit will go to the tenant or be kept for himself. Since security deposits are kept in the bank, they might very well accrue a certain amount of interest. Be sure to clarify this in your residential lease agreement.
Residential Lease Security Deposits #6: Normal Wear and Tear
Damage sustained to the dwelling that is found to be within the scope of ‘normal wear and tear’ cannot be deducted from the return of the security deposit. Normal wear and tear may be subjective, but the specifics are usually included in the leasing agreement. A dwelling where a tenant has resided for ten years will certainly develop some wear and tear!
Residential Lease Security Deposits #7: Notification
In most states, landlords are required to notify the tenant in writing of the status of his or her security deposit. This means that a check for the amount of the deposit must be issued, or the landlord must send an itemized statement that details the reasons why he or she is keeping the security deposit.