Security Deposit Law

Updated March 9, 2023
7 min read

Disputes between tenants and landlords over security deposits are common, and the laws and regulations surrounding these deposits can be confusing. Knowing and understanding your legal rights and responsibilities is vital when entering a lease agreement. So, what is security deposit law, and how does it impact your agreement?

What Is Security Deposit Law?

When a tenant and landlord enter a rental agreement, the contract will specify the security deposit details required. Landlords demand a security deposit to pay for any necessary repairs or damages that the tenants caused to the property during the course of the rental agreement.

Security deposit regulations are governed by state law, and, therefore, can vary from state to state. However, the rules in every state allow a landlord to request a security deposit from a tenant to cover the cost of any possible damages that exceed what would be described as normal wear and tear. In some scenarios, the security deposit can also be used to collect any unpaid rent at the end of a tenancy.

Security deposit laws require the landlord to return unused money to the tenant when the tenant moves out of the rental unit or property. Each state sets regulations on when the security deposit must be returned to the tenant.

Security deposits apply to both commercial property and residential leases.

What is a security deposit for rent?

Renters deposit laws define a security deposit as money paid to a landlord at the beginning of a rental contract to cover damage to the rental property that the tenant may cause. The landlord may use this money to repair any damage to the property that exceeds normal wear and tear or utilize the deposit as reimbursement for any outstanding rent due when the tenancy agreement terminates.

Tenant's rights for security deposits

Tenants have rights under both state and federal law, such as:

  • The right to not be discriminated against;

  • The right to live in a safe and habitable property;

  • The right to not be charged a security deposit that exceeds the state law limit;

  • The right to have a security deposit returned within the applicable legal time frame; and

  • The right to seek legal action in small claims court if the landlord fails to comply with the relevant regulations.

If you want to know more about tenants' rights and what should be included in an agreement, you can learn more and even create a lease agreement on Lawrina.

How A Landlord Can Use Security Deposit Laws

Security deposit laws permit landlords to utilize the security deposit to repair any damage to the property that exceeds normal wear and tear. For example, worn carpet or faded blinds would be considered normal wear and tear and could not be replaced using a tenant's security deposit. However, cigarette burns, broken tiles, or structural damage to fixtures could be defined as exceeding normal wear and tear and be repaired with funds from the security deposit.

State law may also permit a landlord to deduct unpaid rent from the security deposit in the following scenarios:

  1. The tenant moved out and abandoned the lease early without giving legal notice (typically 30 days);

  2. The tenant is legally evicted;

  3. The tenant leaves under appropriate terms but was behind on rent payments;

  4. The tenant remains at the property after the tenancy termination date.

Maximum security deposit

Laws on deposits, and security deposit limits are set by state law. Typically, the security deposit will be equivalent to one month's rent, with some states regulating this as the maximum security deposit allowed.

Inspect The Property After Moving Out

One of the best ways to avoid disputes and ensure you have your security deposit returned is to keep clear documentation regarding the state of the property. The landlord will inspect the property before renting to assess and detail any existing problems or damage. A move-in statement should be provided to the tenant documenting the property's condition and should include photos detailing any pre-existing issues or damage if possible. 

The landlord will then use the move-in statement when inspecting the property at the end of the tenancy to assess and determine any damage or excess uncleanliness. New photos will be taken to document the property's condition, and a comparison will be made to determine any damage the tenant caused.

It is required by rental deposit laws for a tenant to thoroughly inspect the property upon moving in and document the condition with their own photos and record any existing defects. At the end of the rental agreement, the tenant should take their own photos and detailed information on the condition of the property before moving out. Having independent documentation can be valuable if a dispute should arise over the use of the security deposit.

Recovering The Security Deposit From The Landlord

A landlord must refund a security deposit within a stipulated time period that varies between states. The tenant should be provided with an itemized statement detailing any expenses for repairs and cleaning services mailed to their new address. Any costs will be deducted from the security deposit, and the remaining money will be returned to the tenant.

Allowable deductions on a security deposit

A landlord may only use the security deposit to repair damage to the property that exceeds what would be considered normal wear and tear. There are also restrictions surrounding the expense and extent of the repair. For example, one chipped tile does not warrant replacing an entire bathroom. In many states, a landlord may also use the security deposit for any outstanding rent due.

Time frame for returning security deposits

Most states require a landlord to return a tenant's security deposit within 30 days. However, time limits vary from 14 to 60 days. An itemized statement outlining any deductions and the remaining security deposit should be mailed to the tenant's new address.

Taking A Landlord To Small Claims Court

Disagreements between tenants and landlords over security deposits occur frequently. If a landlord misuses or withholds a security deposit in bad faith, the tenant can file a lawsuit in small claims court. As with any legal issue, it is best to contact a professional lawyer who can advise on the laws and regulations in your state.

Key Takeaways

State law allows landlords to require tenants rights security deposits to cover any potential damage to a property during the term of a rental agreement. Both the tenant and the landlord have legal rights under security deposit laws which vary from state to state. If you are concerned about your tenancy or lease agreement, don't hesitate to seek legal help.

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Frequently Asked Questions

Does my landlord have to provide me with a receipt for the security deposit?

The majority of states expect the landlord to provide the tenant with a receipt for the security deposit for rent. The receipt should include: 

  • The amount of the security deposit paid; 
  • The date on which payment was received; 
  • The name of the landlord; 
  • The intended use of the security deposit; and 
  • The signature of the landlord or the agent representing the landlord. If your landlord fails to provide you with a receipt for your security deposit, you should make a written request for a copy.
Should I seek legal assistance to resolve a landlord-tenant dispute?

It is always advisable to attempt to resolve any disputes directly with your landlord. However, if communication breaks down and you fail to make progress, seeking professional legal help is a viable option. A professional mediator or a lawyer can facilitate communication between the tenant and landlord to work towards a resolution. If mediation fails, a lawyer can assist you in filing the necessary forms for a lawsuit in small claims court.

What is the difference between renting and leasing a property?

Renting can be defined as a month-to-month agreement that lasts only one month and renews each month with the same terms and conditions. Under a rental agreement, you can often move out and terminate the contract at any time if you provide 30 days written notice. A lease agreement is typically for a fixed term, usually one year or longer.

Should I be getting paid interest on my security deposit?

Most states require a landlord to pay interest on a tenant's security deposit. For example, in New York, the landlord must provide details of the bank where the deposit is held and pay the tenant any annual interest accrued minus 1% for the landlord's administrative costs. You can choose whether the interest is held in trust until termination of the tenancy, subtracted from your rent statement, or paid in a lump sum annually.