Security Deposits
A security deposit is a deposit of money to the landlord to ensure that rent will be paid and other responsibilities of the lease performed (e.g., paying for damage caused by the tenant). The laws surrounding these deposits vary from state to state; this is a general overview.
Security Deposit or Last Month's Rent
A security deposit and the last month's rent are not the same thing. Last month's rent is the pre-payment to the landlord for the last month of tenancy. The amount of the last month's rent and of the security deposit each are usually one month's rent, and in some states they can not be greater than one month's rent. If the landlord later raises the rent, he or she can require the tenant to increase both the amount of the last month's rent and the amount of the security deposit to equal the new rent. A landlord typically cannot transfer one for the use of the other without the tenant's consent. Likewise, the tenant may not use the security deposit as the last month's rent.
Security Deposits: Receipts and Interest
Upon receiving a last month's rent and/or a security deposit, the landlord should give the tenant a receipt for each prepayment. If he or she does not, it is appropriate for the tenant to ask for one. In many states, the landlord is required to give the tenant a receipt. The following information should be included in the receipt:
the amount paid,
the date on which payment was received,
the intended use of the payment,
the name of the person receiving it,
if an agent is involved, the name of the landlord for whom the rent is collected, and
the signature of the landlord or agent.
If the last month's rent is collected, the landlord should also give the tenant a statement indicating whether he or she is entitled to interest. The tenant should provide the landlord at the termination of tenancy with a forwarding address where the deposit and interest is to be sent.
IMPORTANT: THE LANDLORD MAY BE REQUIRED BY STATE LAW TO PAY INTEREST ON BOTH LAST MONTH'S RENT AND SECURITY DEPOSIT
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