Security Deposit Basics

A security deposit is a sum a tenant pays a landlord to ensure a rental property remains in good condition. Most tenants expect to get their security deposit back once the lease ends. If the tenant has unpaid rent or caused property damage, the landlord can use the tenant's security deposit to cover these costs.

The laws about the use of security deposits vary from state to state. This article explores the security deposit basics.

The Security Deposit

Landlords often ask for a security deposit at the start of most residential leases. The purpose of this deposit is to reassure the landlord that the tenant will keep the rental unit in good condition.

The security deposit is also a reassurance against unpaid rent, unpaid utilities, or property damage. At the end of the lease, the landlord can make deductions against the security deposit to cover any of those items.

Security Deposit vs. Last Month's Rent

A security deposit is not synonymous with the last month's rent. Often, landlords ask for the first month's rent, the last month's rent, and a security deposit for new tenants. Landlords may ask for the last month's rent in advance to ensure there are no issues with rent when the lease ends.

Security Deposit Law

State and local laws often regulate security deposits. For example, in Maryland, landlords cannot ask for more than two months' rent as a security deposit. Tenants should check local laws to ensure their landlord is not overcharging for a security deposit.

Unlike the last month's rent, most state and local security deposit laws require the landlord to do the following:

• Place the deposit in an interest-bearing account
• Give the tenant a receipt for the security deposit
• Pay the tenant any interest collected at the end of the lease

Preserving the Security Deposit

Security deposits often run into the thousands, and most renters want a security deposit refund. Tenants should take precautions to ensure they receive a full security deposit return.

One precaution is a pre-move-in inspection. Some landlords or property managers will provide an inspection form. If they don't, the tenant should document the rental property's condition through photos, video, and notes. Afterward, the tenant should give the landlord a copy and keep one for themselves.

During the lease term, tenants should keep the rental unit in good condition. They should notify the landlord immediately if the unit needs necessary repairs. The lease agreement should include details on who and how to request repairs. Tenants should keep copies of all requests and documentation in case of a security deposit dispute.

Return of the Security Deposit

Before the lease ends, the tenant should give the landlord written notice of their intent to vacate the rental unit. Lease and rental agreements often require proper notice if the renter is not renewing the lease. Renters can use a letter for written notice. This letter should include the following:

• Date of departure from the rental unit
• Proposed dates for the final walkthrough
• Forwarding address for security deposit refund and final utility bills
• Phone number
• Request for return of security deposit

State and Local Law

Tenants should check their state and local laws for more specific information on returning security deposits. In some states, like Maryland, the landlord forfeits the security deposit if they fail to do the following:

• Notify the tenant, by certified mail, of the day and time of the final walkthrough
• Hold the walkthrough five days before or after the move-out day
• Disclose these rights in writing when the tenant pays the security deposit

Security Deposit Deductions

Landlords can make deductions for damages that exceed normal wear and tear. Normal wear and tear include faded window treatments or scuffs on the carpet. Things like holes in the wall or broken appliances are not normal wear and tear. Landlords can charge tenants for the cost of repairs for damages.

Tenants must leave the apartment clean and free of refuse and garbage. If they do not, the landlord may charge for a cleaning service.

Landlords must give the tenant an itemized statement for all deductions. The itemized statement should include the following:

• A detailed list of damages
• The required repairs
• The actual or estimated cost of repairs

The landlord must return any leftover portion of the security deposit, with the statement, to the tenant.

Security Deposit Return Timelines

State law or local landlord-tenant laws provide a timeline for the return of the security deposit. This timeline can range from 15 to 45 days after the tenant moves out. The landlord must refund the security deposit, less any itemized deductions. If they fail to do so, they may face a small claims court lawsuit.

Remedies

The full return of a security deposit is a significant source of landlord-tenant disputes. If the landlord does not return the tenant's security deposit, the tenant can file a suit in small claims court. Tenants can also challenge items the landlord deducts from the deposit.

If the tenant prevails, the court could award the tenant three times the amount of the security deposit and attorney's fees, if applicable.

Get Help

Landlord-tenant law is a niche area of real estate law. An experienced landlord-tenant attorney can help you resolve any legal issues related to your security deposit. Speak to a qualified landlord-tenant attorney today.