Security Deposit Interest

Rental security deposits are checks sent into the owner of a piece of property to guarantee that the tenant will continue to pay the rent when it is due each month. The security deposit can be used by the landlord for repair costs or cleaning costs for damages caused by the tenant or for the tenant not cleaning the property prior to moving out at the end of their lease. When a security deposit is sent to a landlord, it the tenants right to receive a security deposit receipt for the deposit that includes the name of the owner, the date received, and a description of the dwelling. The receipt must then be signed by the landlord. Security deposits are typically placed into bank accounts where they can gain interest.

Step 1: Submit the Deposit

When a tenant agrees to a rental contract with a property owner he or she must then send their security deposit to the landlord. Most landlords require that the security deposit be provided when the contract is signed and the keys to the property are handed to the tenant. The landlord must then provide the tenant with a receipt of their security deposit.

Step 2: Deposit for Interest

It is required by law that landlords must pay interest on a security deposit or on rent money held for more than six months at a time. The landlord will choose a bank close to them to deposit the security deposit into an account that will accrue interest.

Step 3: Determining Interest Rates

Each state will have different interest rates when it comes to security deposit interest. The tenant can figure out how much interest on security deposit they will earn by researching the rates in the state they are living. Each state has different statutes and acts regarding how much interest can be earned with a rental security deposit. A tenant can also use a security deposit interest calculator to calculate how much interest will be earned.

Step 4: Returning Deposit

Once the term of the lease is complete the landlord must return the security deposit along with all interest earned if the landlord does not need to use the money for repairs at the property. If the landlord needs to use money from the deposit he or she can also use the interest earned as long as they notify the tenant for the fees used.

Step 5: Cash the Check

When the tenant get security deposit back, he or she can cash the check or deposit it into their personal account.

Legal Help

If the tenant does not know or understand their rights under their state’s security deposit interest laws then they should contact a Landlord Tenant Attorney immediately for legal counseling. The same legal counseling can be acquired by the landlord as well.

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