If you are a first-time renter, you may be scratching your head and wondering what in the world is a security deposit. Most (if not all) leases require a tenant to pay a security deposit at the time of signing. It is important that you understand what a security deposit is, your rights when it comes to the deposit, and have the means to pay it at the time of signing a new lease.
What is a Security Deposit?
A security deposit is an extra payment due to the landlord before moving into a new rental. Its purpose is to provide the financial means for a landlord to repair any negligence on the part of the tenant that may result in damage to the property. However, unlike application and pet fees, the security deposit is usually refunded back to the tenant when they move out of the rental.
How Much is a Security Deposit?
The landlord sets the amount of the security deposit due upon signing. Many times, it is equal to one month’s rent. However, each state has different rules and regulations as to how much a landlord can charge. Tenant-Landlord laws change often, and it is important that you are familiar with the laws in your state.
What Happens to My Security Deposit During the Lease Term?
Again, tenant-landlord laws vary from state to state, so it is important that you familiarize yourself with your state’s specific laws. However, most states require a landlord or property manager to keep the security deposit in a bank account separate from all other finances. Depending on where you live, as a tenant you also have the right to know which bank holds your security deposit.
When and How is my Security Deposit Refunded?
We sound like a broken record, but when and how your security deposit is refunded varies from state to state. Most states require that a security deposit be returned within a given time period from the end of the lease term.
Will I Always Get my Security Deposit Returned?
No. A security deposit exists for the express purpose of providing the landlord with some type of financial insurance against damage or a tenant’s failure to uphold the terms of a signed lease. Provided that you fulfil your obligations as a tenant and properly care for the property during your lease term, you should receive your security deposit back in full. There are several reasons why a landlord or property manager may hold your security deposit.
- Unreasonable damage to the property – in general, a security deposit cannot be used for normal wear and tear. Let us face it – homes do not normally age like fine wine. However, tenants are expected to keep the property in reasonably good condition. Examples of unreasonable damage include large stains on carpets, holes in the walls, broken appliances, damage to floors because of pets, etc.
- Failure to pay rent or breach of lease – if a tenant fails to pay rent or breaches the terms of the signed lease, a landlord may have the right to withhold a tenant's security deposit.
- Cleaning fees – while a security deposit cannot be used for normal cleaning of the property between tenants, if there is major cleaning required because of a tenant’s actions a security deposit can be withheld.
If a landlord or property manager withholds a security deposit, the tenant has the right to receive an itemized list of what the security deposit was used for. Again, it is important to remember that tenant-landlord laws vary from state to state.
Is a Security Deposit the Same as Last Month’s Rent?
In some states, the landlord has the right to require both a security deposit and a payment equal to one month’s rent. A one month’s rent payment cannot be used for anything other than covering unpaid rent. Depending on the terms of the lease, you may receive the payment back at the end of the lease or it may be applied to the last month of the rental lease.
As with everything, it is important to familiarize yourself with the tenant-landlord laws in your local area. If you ever have questions, it is important to get answers before signing any lease paperwork. Once the paperwork is signed, you are legally liable to fulfill the terms.