There's a requirement in practically every lease, and especially residential leases, that the tenant has to pay a "security deposit" to protect the landlord's main interests: insuring the payment of rent and avoiding losses due to damage to the leased premises caused by the tenant. It sounds simple enough, but it can be complicated.

Almost all states have landlord-tenant laws that cover security deposits, including things like:

  • The amount of security deposits that can be charged
  • The types of damages and repairs that a landlord can make deductions for
  • When any balance must be refunded to a tenant

The landlord-tenant laws on security deposits vary significantly from state to state, so before you sign any lease, check the laws in your area, or ask an experienced real estate lawyer to read over the lease to make sure your rights are protected.

Amount of Security Deposit

Many state laws limit the amount of security deposit that a landlord may collect from a tenant. Frequently, the deposit can't exceed the equivalent of one or two months' rent. In some states, the deposit can equal three months rent if the leased premises are furnished, that is, if the property comes with furniture and appliances.

In addition, some states require the landlord to hold the security deposit in account that is separate from any other of the landlord's bank accounts and that the account also be one that pays interest.

Many statutes also provide that if a landlord charges more than the amount permitted by the landlord-tenant law, the tenant might be entitled to recover double or treble (triple) damages, based on the excess amount paid.

What the Deposit Covers

Generally, the security deposit is a fee that is charged by the landlord in advance of the tenant moving into the premises. It's meant to be used by the landlord for things such as:

  • Compensation of a landlord for a tenant's default in the payment of rent
  • Repair of damage, with the exception of ordinary wear and tear, that is caused by the tenant or his or her guests, such as permanently damaged carpet or flooring caused by cigarette burns or water-bed leakage, large holes in the walls, and broken windows or doors
  • The cleaning of the premises when the lease ends or terminates

In many states, the landlord can't use any portion of the security deposit to cover the costs of screening the tenant before renting to him or her. In addition, a landlord typically can't make a claim against the security deposit for things like:

  • Damages to the premises or any defective conditions that existed before the tenant signed the lease or moved in
  • Ordinary wear and tear, such as paths worn into the carpet or flooring caused by normal foot traffic and minor holes in the wall that were used to hang pictures and mirrors
  • Faded paint on interior walls

Charges and Refunds

In some states, within a reasonable time after notification of either party's intention to terminate or end the lease, or before the lease expires, the landlord is required to notify the tenant in writing of his or her option to request an initial inspection of the premises and of his or her right to be present at the inspection. In other states, it's the tenant's duty to ask for inspection. The idea is for the parties to identify any potential problems or damages that would enable the landlord to make deductions from the security deposit.

Based on the initial inspection, the landlord usually must give the tenant an itemized statement specifying repairs or cleaning that could result in deductions in the deposit. And, the tenant typically must be given the opportunity to fix any problems on his or her own so that there are no deductions from the deposit.

Most statutes provide that, within a specified period of time after the tenant leaves the premises, the landlord has to give the tenant an itemized written statement of why there were deductions from the deposit and the amount of each deduction. Also, many states require the landlord to give the tenant copies of receipts or invoices showing that the repairs were made (or estimates if the repairs can't be made immediately).

If, after any deductions were made, there's any balance of the deposit left over, the landlord is required to refund it to the tenant.

The time in which the landlord must give the itemized statement and any refund varies from state to state, but generally it's anywhere from 14 to 45 days after the tenant leaves the premises.

In most instances, if a landlord does not give a tenant the proper itemized list of deductions and/or any refund, the tenant can sue the landlord in small claims court and possibly recover two to three times the amount of the security deposit.

As a practical matter, both the landlord and tenant can best protect their rights and interests in the security deposit by making a thorough inspection of the premises before the tenant moves in and by taking notes or pictures of any damages that exist at that time. To that end, some states require that the parties sign a written statement that lists any such damages.

Questions for Your Attorney

  • I don't agree with some deductions my former landlord deducted from my security deposit. Is there anything I can do?
  • My landlord didn't give me a receipt when I paid my security deposit, and now he says that I only paid him $250, when I know I paid him $350 cash. What can I do?
  • A few weeks after I moved in, I found some damage to the floor under the sofa that came with the apartment. I told my landlord about it, and he said not to worry about it. Now, he's deducting the damage from my security deposit. How can I challenge this deduction?
  • My tenant didn't tell me about a leaking water pipe in the kitchen until after permanent damage was done to the floor and cabinets. She says she told me as soon as she discovered it. Can I deduct the damages from her security deposit?