The most common deposit a tenant in Alabama must pay is a security deposit. The deposit gives the landlord assurance that if the tenant, upon moving out, owes any rent or has caused any damages to the property, the landlord can use the security deposit to offset the owed rent or fix the damages. Most residential lease or rental agreements in Alabama will require the tenant to pay a security deposit to the landlord.
What Is the Alabama Security Deposit Law?
The security deposit law Alabama permits the landlord or owner of a rental property to collect a sum of money from their tenant that will go toward any unpaid rent or damages the tenant causes when they move out. There are limits to the amount the landlord can collect, and they must repay the money to the tenant barring any issues, within 30 days of the end of the tenancy agreement.
Maximum Security Deposit Charge in Alabama
As with many other states, in Alabama the maximum charge for a tenant security deposit is an amount equal to one or two months’ rent. Landlords may charge much lower than that if they choose.
Exceptions to the limit
The limit that is placed on how much the landlord can require their tenant to pay can vary based on some of the following circumstances:
- Whether the lease agreement is a fixed term lease or month-to-month lease;
- Whether the rental is a furnished residential property;
- How many rental units the landlord owns;
- Other factors such as age, liability risks to the landlord, and changes that are made to the premises.
Allowable Deductions in Alabama Rental Security Deposit Law
A landlord can use a security deposit for the following but only when the tenancy or lease has ended, or the landlord has terminated the agreement:
- Rent owed;
- Property damage that is beyond normal wear and tear (this includes permanent fixtures such as smoke alarms);
- Costs of removing or storing your property left in the unit or to return personal property.
Normal wear and tear vs. damage in Alabama?
In Alabama, normal wear and tear to a rental property refers to the natural or expected deterioration to the rental property or items in the rental property from everyday use over a period of time.
On the other hand, the tenants may damage the property not as a result of aging or use over time but as a result of the tenants’ own negligence, carelessness, or abuse of the property or items in the property. This also includes damages the tenants’ guests cause.
Return of Security Deposit Alabama
For the return of the security deposit, Alabama laws require that landlords must return deposits to the tenant within 30 days of the end of the tenancy agreement. When the landlord makes deductions based on unpaid rent or damages, they must send the deductions in an itemized statement with the remainder of the deposits (if any) returned to the tenant within the 30 days from the end of the lease agreement.
Security Deposits and Tax Filings in Alabama
For landlords, security deposits do not become taxable income until they become the landlord’s property. As long as the deposit is refundable, or intended to be repaid to the tenant, money from security deposits are not taxable
Additional Rules and Regulations in Alabama
Here are some other rules you should certainly pay attention to regarding paying a security deposit for a rental in Alabama:
- Your lease agreement should include the amount your landlord is charging for your security deposit.
- Your landlord should hold your deposit in a special bank account.
- The landlord doesn’t have to provide a receipt for the deposit.
Security deposits are a very common feature of rental properties that you should understand before you enter into a lease agreement. You should clarify any unclear terms regarding the deposit before you sign your lease.