A security deposit is an amount of money a tenant pays to a landlord or property manager when renting an apartment or house and which covers damages, unpaid rent, and (in some cases) unpaid utilities. Your landlord may ask you to pay your deposit before or at the time you sign your lease. In most cases, your security deposit will cost the equivalent of one to two month's rent and is refundable.
However, laws vary depending on your state and municipality. In some states, laws about security deposits are quite strict, while other states have more relaxed laws governing them. Always be sure to examine your state and local laws about security deposits and reach out to an attorney or tenancy rights group to help you understand the full implications of your local laws.
A security deposit is meant to protect your landlord. When you sign your lease, you typically agree to two important things:
But not all tenants deliver on these promises. To help ensure tenants take care of their responsibilities, landlords or property management companies ask for security deposits. If you decide to break your lease, a landlord might have the right to keep your deposit as a means to cover the lost rent and the costs to find a new tenant.
Most of the time, the security deposit covers physical damages to the home. For example, a hole in the wall, broken cabinetry, or damaged flooring. The repair cost is deducted from the security deposit at the end of the lease. In many states, the landlord is required to present the tenant with an itemized list of damages and repair costs.
A security deposit is an agreed-upon amount paid at the beginning of a lease. Tenants pay the security deposit before moving in, often paid with the first and last month’s rent at the lease signing. Sometimes landlords will ask for the security deposit before the lease signing date to secure the apartment. Whenever you pay your deposit, ask for a receipt. Your landlord is obligated to give you one along with your leasing paperwork.
The landlord or property management company holds the tenant/’s security deposit during your lease term. Many states require the landlord to put the money in a particular savings or bank account held separately from other funds, called an escrow account.
When your lease ends, the tenant moves out of the apartment and the landlord completes an inspection. So long as the tenant follows all moving out rules and the apartment is in good condition, the landlord returns the security deposit funds. If the state laws dictate, the landlord may also be required to pay interest on those funds.
If you decide to renew your lease, you may be asked to pay an additional security deposit. This is common when your rent payment increases. Not all landlords will ask for more deposit money, but don’t be surprised if they do.
A security deposit typically covers financial obligations the tenant owes the landlord or property manager at the end of the rental agreement, such as unpaid rent, fees, and utilities. Security deposits may also cover unpaid physical damages. Here’s a closer look at what a security deposit can cover:
A landlord can’t recover costs for reasonable wear and tear, but they can make deductions for damages beyond what’s normal. Your lease should have a clause about what is considered as “damage.” Some state laws allow landlords to withhold funds to cover damage for something as small as a nail hole.
It’s also important to note that tenants can be held financially responsible for not alerting their landlord to certain issues like mold growth. Always review your lease carefully before signing and again before moving out.
Many states allow landlords to withhold security deposits for unpaid utility bills. Some states only allow security deposits to cover some types of utilities. Always be sure to check your state and local laws.
Depending on the terms of your lease, your landlord or property manager may charge fees for things like pest control in addition to your monthly rent. Another standard fee is for late charges. For example, if any fee is left unpaid when you move out, your landlord may be allowed to deduct it from your security deposit.
Most leases will have some clause about the condition the tenant is supposed to leave the apartment in when they move out. For example, tenants may need to have the apartment professionally cleaned. If the apartment is not thoroughly cleaned, the landlord or property management company can charge a cleaning fee.
If you moved in with a cat or dog, you likely paid a pet deposit or pet rent. If not, your landlord may deduct damages caused by your pet or special cleaning fees from your security deposit.
In states like Massachusetts, landlords can ask their renters to pay property taxes. If the tenant fails to pay, the landlord can deduct unpaid taxes from the security deposit.
A common breach is having a pet when your lease prohibits it. But many states have open language like this included in their landlord-tenant laws. These can have far-reaching effects, but the important thing to note is that it has to be outlined in the lease or rental agreement. All the more reason to carefully review your rental agreement, or have it reviewed by an attorney before you sign.
Remember that your landlord can keep the entire security deposit if warranted under your lease.
In most cases, a security deposit is required when moving into a rental property. They are legal in all states, but that doesn’t mean there aren’t any restrictions. Many states have laws regarding what they can and cannot do with a security deposit.
For example, states can restrict the amount of the security deposit, when a landlord can receive the funds, when the landlord can withhold the funds, and how quickly the landlord has to return the deposit after the lease ends.
If you come across a listing for an apartment that boasts “no security deposit required,” be wary. In some cases, this may be a rental scam. They may also disguise the lack of security deposit as a non-refundable one-time fee.
In most places, landlords require a security deposit amount equivalent to one month’s rent. This is a separate amount from the first and last month’s rent that is sometimes also required. However, the amount will vary from one landlord to the next.
Typically, a landlord cannot ask for more than one to three month's rent by law. And even in states where there are no caps, the local rent market has standard practices that keep deposit amounts in check.
For example, a landlord will find it very difficult to ask for a six-month deposit when most landlords require one month’s rent. On the other hand, a tenant with a low or bad credit score or previous eviction might offer a larger security deposit to improve their rental application if it’s legal.
A security deposit may be non-refundable. Though a deposit, by definition, is a refundable amount of money, some landlords charge a non-refundable security fee. These fees are typically called non-refundable deposits. Usually, non-refundable deposits are smaller than refundable ones. They are legal in many states.
You get your security deposit back by fulfilling your obligations as outlined in your lease agreement. That typically means paying your rent, taking good care of your apartment, and keeping wear and tear to a minimum. But that can also mean having the carpets professionally cleaned when you move out.
If your lease stipulates that you pay administrative or other fees during your time there, you should also have these paid in full to receive all of your deposit. The same goes for utility charges and other items you’ve agreed to pay for as a tenant.
The good news is that your lease should have a clause or two that explains exactly what you need to do to get your deposit back. If it’s not clear, be sure to ask your landlord about how you get your deposit back before you sign your lease, and get this in writing. Be sure to consult an attorney if you’re unsure about any part of the process or lease agreement.
How long it takes to get your deposit back will depend on your state and your landlord. Most states have a time requirement on the return of your security deposit. In Hawaii it’s 14 days, but Indiana landlords have up to 45 days.
In order to withhold the deposit, some states require landlords to provide tenants with an itemized statement of damages within a certain time period. For example, in Illinois, a landlord has 30 days to issue charges. If they fail to do so, they have 15 days to then return the entire deposit.
If your landlord fails to return your security deposit and also fails to show a legal reason as to why those funds were withheld, you have the right to sue. In most states, this is done in small claims court. One option is to send a demand letter, reviewed by an attorney, before filing your court claims. Many landlords will pay to avoid going to court.
While the upfront costs of filing a small court claim can be discouraging, it can pay off. In many states, the landlord can be held financially responsible for both your court costs and up to three times the amount of your deposit.
Security deposits and laws governing security deposits vary greatly from state to state. Some security deposit alternatives you may find include:
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