Purpose and Use of Security Deposits

All states allow landlords to collect a security deposit when a tenant moves in and hold it until the tenant leaves. The general purpose of a security deposit is to assure that a tenant pays rent when due and keeps the rental unit in good condition. Rent a landlord collects in advance for the first month is not considered part of the security deposit.

State laws typically control the amount landlords can charge and how and when they must return security deposits. When a tenant moves out, landlords will have a set amount of time (usually from 14 to 30 days, depending on the state) to either return the tenant’s entire deposit or provide an itemized statement of deductions and refund any deposit balance.

Although state laws vary, landlords can generally withhold all or part of the deposit to pay for:

  • unpaid rent
  • repairing damage to the premises (except for “ordinary wear and tear”) caused by the tenant, a family member, or a guest
  • cleaning necessary to restore the rental unit to its level of cleanliness at the beginning of the tenancy (taking into consideration “ordinary wear and tear”), or
  • restoring or replacing rental unit property taken by the tenant.

States typically also allow landlords to use a deposit to cover the tenant’s obligations under the lease or rental agreement, which may include payment of utility charges.

Landlords don’t necessarily need to wait until a tenant moves out to tap into their security deposit. A landlord may, for example, use some of the tenant’s security deposit during the tenancy—for example, because the tenant broke something and didn’t fix it or pay for it. In this case, the landlord should require the tenant to replenish the security deposit.

To avoid misunderstandings, leases andrental agreemenst should be clear on the use of security deposits and the tenant’s obligations.

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