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Security Deposit Law

Updated October 10, 2023
7 min read
Security Deposit Law: papers, pen, money, coins, house, card

Are you worried about whether your landlord will return your security deposit or how much will be deducted from the original security deposit? Wondering what you would do if the landlord refused to return your money? 

At times, landlords and tenants tend to disagree on security deposits, which may lead to confusion. However, when you know the security deposit law, legal rights, and responsibilities, you can easily avoid these confusions while entering a lease agreement. Here is what you should know about security law and its effect on an agreement.

What Is Security Deposit Law?

A security deposit is an advance payment made during a rental agreement. Landlords demand a precautionary payment to cover the costs of any property damages and repairs during the rental period. This security deposit is specified in the rental agreement and applies to residential and commercial properties. 

Every state has a set of security deposit law guidelines for: 

  • Setting security deposits at the time of agreement

  • The return of the deposit after the rental agreement ends

A security deposit law is primarily meant to address and repair issues that are beyond normal. Also, landlords can sometimes use the deposit to recover unpaid rent after the tenancy period. 

However, the landlord must return the unused money to the tenant after the tenancy period ends. There are state-specific rules about when the security deposits can be returned.

Tenants’ Rights for Security Deposits

Knowing tenants’ rights for security deposits is quite critical. In some cases, landlords misuse the security deposits in the name of “damage repair.” However, if you're a tenant, you must be aware of the following rights under federal and state laws: 

  • The tenant has the right to live in a safe and habitable property.

  • The landlord cannot charge a security deposit that exceeds the limit prescribed within the state laws.

  • The tenants cannot be discriminated against in any way.

  • Landlords should not charge for ordinary wear and tear.

  • The landlord must return the security deposit within the specified timeframe regardless of the repair charges. 

  • The tenant can seek legal action in court if the landlord fails to comply with the regulations under state law.

Getting in touch with a property lawyer can provide more clarity and a deeper understanding of the security deposit law. You can visit Lawrina to explore more about rental agreements and security deposits. 

How a Landlord Can Use Security Deposit Laws

A security deposit law aims to protect both landlords and tenants. If a tenant doesn't adhere to the rental agreement and property usage rules, the landlord can use the security deposits per the following conditions: 

  1. If the tenant causes structural damage to the home fixtures.

  2. If the tenant causes damages like broken tiles, burns, etc.

These damages are considered to exceed the normal wear and tear, so the landlord can use the security deposit to repair them.

On the other hand, if regular wear and tear, such as fading carpet or window blinds, exist, the landlord cannot fix them with security deposits. 

Sometimes, the landlord can deduct the unpaid rent from the security deposit. These cases include:

  • The tenant moved out without legal notice, abandoning the lease before terminating the tenancy period. 

  • The landlord legally evicts the tenant from the property.

  • The tenant missed rental payments but left the property according to legal terms.

  • The tenant stays at the property after the tenancy termination without renewing the rental agreement.

The landlord can deduct the amount in the above four cases to make up for the outstanding amount, and the tenant will have no legal right to get back that portion of the deposit.

Maximum Security Deposit Limits

Federal laws don't specify a specific security deposit limit. Instead, state laws dictate this.However, it's typical in a rental agreement to charge a security deposit equal to one month's rent. In some states, it is the maximum allowable security deposit.  

Property Inspection After Moving Out

Once the tenancy agreement is over, there is always a chance of disputes over the security deposit refund and the payable amounts. To avoid this confusion, it's best to conduct a property inspection and document the details for more clarity. Here are some quick pointers for a property inspection that you should consider:

  • The landlord conducts the property inspection and documents the state of the property before handing it over to the tenants.

  • The inspection document must highlight the details and any existing damages and problems with the property.

  • The landlord must provide a move-in statement to the tenants mentioning the property conditions.

  • The landlord should include visual evidence –– photos –– to highlight the pre-existing issues in the property.

The move-in statement indicates the property's current state and is endorsed by the tenant while moving in. So, once they decide to move out, the landlord will use the same statement as a reference to check for additional damages. Landlords can take new pictures to evaluate the changes, which can help determine the extent of damages under security deposit law.

Here, it's important to consider the requirements of the rental deposit laws. They emphasize that tenants must also inspect the property while moving in and compare the conditions with the photos provided. 

As a tenant, you can add any necessary information about the property. This helps both parties to formulate their independent documents, which proves handy in case of disputes over security deposits. 

How To Recover the Security Deposit From The Landlord

The security deposit law details some critical aspects to ensure tenants recover their due amount from the landlords. Typically, landlords must refund the security deposits within a specific timeframe prescribed by state law. 

When the landlord refunds the amount, they must make sure to:

  1. Provide a statement mentioning the expense details like cleaning, repairs, etc.

  2. Deduct the total expense from the security deposit and refund the remaining balance to the tenant. 

But when it comes to recovering the security deposits from the landlord, here are some key pointers to ensure a flawless transfer of funds.

Allowable Deductions on a Security Deposit

The security deposit law mandates that landlords charge only for damage repair. For instance, a broken piece of window glass means they can use the amount to replace the entire window. In many states, the security deposit is strictly for damage repair, while some allow the landlord to deduct any outstanding due rent. 

The Optimal Time Frame Security Deposits Refund

In most states, landlords are bound to refund security deposits within 30 days after the agreement has ended. But the optimal range for return time is from 14 to 60 days. After deducting any necessary expenses, the landlord must return the security deposit with a detailed summary of expenses to the tenant's new address via mail.

The return of the security deposit is subject to the tenant providing a new address. If the tenant doesn't provide the updated address, the landlord isn't obligated to return the deposit and itemized list of repair expenses.

Taking a Landlord to Small Claims Court

It's common for tenants and landlords to disagree over the security deposit amount. Generally, it happens when the landlord:

  • Misuses the security deposit
  • Refuses to refund the deposit

In such cases, the tenant can file a lawsuit in small claims court. Moreover, the tenant can sue the landlord to recover three times the withheld amount if it is not returned within 30 days of moving out. 

These cases are handled by professional property lawyers who can better advise according to the state and federal laws over the matter. 

Key Takeaways

Thanks to security deposit law, there is protection for both landlords and tenants when they enter into a rental agreement. The law covers critical monetary aspects of property damage during the agreement tenure. The law provides safeguards and rights to both parties to prevent conflicts and disagreements after the tenure has ended. While some security deposit laws may vary from state to state, the spirit of the law ensures fair and just treatment for both parties. 

Legal Disclaimer

Please note that Lawrina does not provide any legal services. The information on Lawrina’s Site and its downloadable content, including legal articles and templates, shall not be considered legal advice and is not guaranteed to be correct, complete, and up-to-date. If you require legal advice on your issue, we recommend you contact a qualified attorney licensed in your state. You personally assume full responsibility for any consequences, damages, and costs associated with your use of any content of Lawrina Services available on Lawrina’s Site. 

By using Lawrina’s Site you agree with mentioned above and give your irrevocable consent to comply with and to be bound by the provisions of Lawrina Service terms. 

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Frequently Asked Questions

Is it necessary for landlords to provide a security deposit receipt to the tenants?

A security deposit receipt is documentation evidence for the transaction between the two parties. Therefore, the landlords need to provide a receipt. When receiving the receipt, make sure that the following information is mentioned:

  • Amount of paid security deposit;
  • Date of received payment;
  • Name of the property owner/landlord;
  • Intended use of security deposit;
  • Signatures from the landlord or the agent representing the landlord. 

In case your landlord has not provided you with a copy of the receipt, you can make a written request for a copy of the receipt.

Should I seek legal assistance to resolve a landlord-tenant dispute?

It's always a better approach to deal with disputes outside the court, preferably directly with your landlord. It saves time and effort for both parties. However, the state laws provide enough protection to the tenants to resolve their queries in court too. Court might be  the right option for you if:

  • You feel like there is a lack of communication between you and your landlord;
  • You don't make any progress in resolving your disputes.

You can also seek a professional mediator or a lawyer to facilitate communication for resolving the matter. However, if that fails too, you can take a lawyer's service to file a case in small claims court and take necessary legal actions. 

Is property renting and leasing the same thing?

A property lease is generally a long-term agreement lasting for a year or more. On the other hand, rental agreements can be on a month-to-month basis. Moreover, the agreement renews every month with the same conditions. Also, tenants can usually opt out of a rental agreement after providing a 30-day prior notice. 

Is there any interest on security deposit payments?

In many states, landlords are bound to pay interest on the security deposit at the time of refund. For instance, the landlord must provide the bank details and pay any additional annual interest subtracting the 1% administrative cost. The tenant may agree to receive the interest amount in a lump sum, or it's subtracted from the rent statement.

What is the maximum amount that landlords are allowed to charge for a security deposit?

There is no specific limit to a maximum security deposit. It varies from state to state and may also be subject to your landlord's preference. Typically, most states set a maximum amount equivalent to one month's rent as a security deposit. If you have a pet, some states also have an additional pet deposit to cater for the potential damage later. 

How can I document the rental unit's condition when I moved in?

The ideal option is to take pictures of the property, especially the damaged or unrepaired areas. Go through the property and make a rental checklist capturing every room and walkway. Focus on the flooring, walls, and other visual conditions and add necessary labels to each picture. Finally, have your tenant sign off the document as an acknowledgment that the tenant agrees to the property's present condition which will affect the security deposit return.