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A security deposit is a sum of money that a tenant pays to a landlord when they move into a rental property. The money is held by the landlord until the tenant moves out and is used to cover any damages to the property or unpaid rent.
When embarking on the search for your first apartment, you may come across the question: "What is a deposit?" This expense is just one of several that commonly accompany the process of moving into a new rental residence. In addition to the deposit, you may also be required to pay a down payment and the first month's rent. Understanding these potential costs can be overwhelming, but gaining more knowledge can assist you in finding a rental that meets your requirements and financial constraints. This guide provides an overview of deposits, including their definition, function, cost, and frequently asked questions.
Definitions and examples of security deposits.
Security deposits have different meanings and applications depending on the context. Generally, a deposit refers to money paid by one party to another as part of an agreement for the use of a property or service.
When it comes to rental property, a security deposit is defined as "money paid by a tenant to a landlord to protect against damages to the property or unpaid rent" (as per the American Bar Association). Landlords often require a security deposit before the tenant moves in, typically ranging from one to two months of rent, depending on local rent laws.
The purpose of the security deposit is to provide the landlord with financial protection in case the tenant violates the lease agreement, is evicted, or causes damage to the property. If the lease allows it, the landlord can use the deposit to cover any losses or expenses caused by the tenant.
Apart from renting, deposits may also be required for other items such as credit cards, cell phone service, cable TV and internet access, utilities, tuition, car rentals, vacation rentals, and moving truck rentals. The need for a deposit, as well as its refundability, may vary depending on the company policy and the individual's credit rating.
What do I need to know about the security deposit?
The lease agreement should clearly state all relevant details regarding the security deposit, including the amount, expiration date, conditions, and whether or not it is refundable to the landlord and the reasons for this. The security deposit is usually paid by cashier's check, money order, or electronic payment to ensure that cash is not used.
In some states, landlords are required to keep the security deposit in an interest-bearing bank account, and tenants may receive deposit slips within a specific timeframe. Additionally, different states have different policies regarding the amount of the deposit and when it should be returned to the tenant, so it is essential to check your state's laws.
Sometimes, the landlord may allow the security deposit to be applied to the last month's rent. In this case, the tenant is not required to pay the last rent, and the landlord will not refund the deposit when the tenant moves out.
If the landlord chooses to withhold some or all of the security deposit, they must provide a detailed statement explaining why. Reasons for not returning the deposit may include if the tenant does not leave the property clean and uncovered, makes unauthorized changes or improvements to the property, damages the property beyond normal wear and tear, or accumulates above-average utility bills when they are included in the rent. Additionally, if tenants fail to remove all personal belongings upon moving out, do not attend the move-out inspection, have not paid rent in the past month, or fail to return all keys to the property, the landlord may withhold some or all of the security deposit.
How much is the security deposit?
Although some states do not have a limit on the amount a property manager or landlord can charge a tenant for a security deposit, most states have set a limit of one month's rent for this cost. However, some states may allow landlords and property managers to charge up to three months' rent as a security deposit. In some cases, you may find an apartment building that requires only a $100 security deposit. Ultimately, the cost of the security deposit will depend on the specific requirements of the landlord or property manager.
Can I get my security deposit back?
To get your deposit back, you must comply with the terms of your lease and maintain the rental property as required. However, the amount of deposit you can be charged and the ways in which it can be used depend on the laws of your state. Generally, most states allow landlords to charge a deposit equal to one month’s rent, but some states permit a deposit of up to three months’ rent or have no limit on the deposit amount. Additionally, some states allow landlords to use the deposit to pay for unpaid rent, utilities, or cleaning fees, in addition to damages to the property. Therefore, it’s important to understand your state’s laws regarding deposits to ensure you receive your deposit back.
When will I pay the security deposit?
Landlords and property managers typically require tenants to pay a deposit before they receive the key to the rental property. The deposit is usually paid when the lease is signed, and it can be paid by money order, cashier's check, or electronic payment. It's important to be prepared to pay the deposit and any other fees that are due at the time of signing the lease. Make sure you have the necessary funds available to avoid any delays in securing the rental property.
When can I get my security deposit back?
It's important to note that the timeframe for returning the deposit may vary depending on the state laws. Some states require the landlord or property manager to return the deposit within 30 days of the tenant moving out, while others allow up to 60 days. Additionally, the deposit may be returned in different forms, such as a check or electronic transfer. To ensure that you receive your deposit back in a timely manner, it's a good idea to provide your new address to the landlord or property manager so they can send it to the right place.
How long will it take to get my security deposit back?
It's important to note that even if you are entitled to receive your security deposit back, your landlord may deduct certain amounts from the deposit to cover any damages or unpaid rent. Make sure to carefully review your lease agreement and take steps to leave the rental property in good condition before moving out to maximize your chances of receiving your full deposit back.
Can I get my security deposit back if I don’t move in?
That is correct. It's important to carefully review the terms and conditions of the lease agreement before signing and paying any fees or deposits. In some cases, the lease may specify that certain fees or deposits are non-refundable. If you change your mind about renting the property before moving in, it's important to notify the landlord as soon as possible to avoid any misunderstandings or disputes. The local housing authority or a qualified attorney can provide guidance on your legal rights and options in such situations.
