Rent and Security Deposit Laws

Paying rent is the most straightforward part of renting a house or apartment. The landlord sets an amount for rent, and the tenant pays this amount per the rental agreement. 

Security deposits are separate from monthly rent. A security deposit is an amount of money paid before or at the start of the renter's lease, sometimes together with first month's rent. The landlord holds on to this sum of money throughout the rental period. After the lease agreement ends, the landlord must return this money to the tenant minus any itemized deductions for damages. This does not include normal wear and tear.

State laws dictate when the landlord must return the security deposit after the end of the lease. They often also set limits for rent hikes and offer legal remedies for rent disputes.

Landlords' Rules for Security Deposits

State laws often regulate how landlords handle a tenant's security deposit. Some states limit the amount of the security deposit a landlord may request. Landlords must carefully manage rent and deposits.

Unlike the last month's rent, most state and local security deposit laws require the landlord to do the following:

• Place the deposit in an interest-bearing account
• Give the tenant a receipt for the security deposit
• Pay the tenant any interest collected at the end of the lease

For example, landlords can charge up to two months' rent for an unfurnished rental property in California. California landlords must also return the security deposit within 21 days of move-out.

Landlords can usually collect the last month's rent upfront in addition to or instead of a security deposit. However, they cannot use the last month's rent to cover end-of-lease damages, as they can with a security deposit.

Higher Security Deposits

Through the screening process, landlords can check a potential renter's background, including their credit score. Some landlords offset potential risks by asking for a higher security deposit.

Landlords may also require the tenant to carry insurance to help cover some damages.

When Must the Security Deposit Be Returned?

State law or local landlord-tenant laws provide a timeline for returning the security deposit. This timeline can range from 15 to 45 days after the tenant moves out. The landlord must refund the security deposit, less any itemized deductions. If they fail to do so, they may face a small claims court lawsuit.

Managing Rent as a Landlord

Part of the purpose of renting is income generation. Nonpayment of rent can lead to eviction, which is time-consuming and often expensive. To avoid any confusion with paying rent, landlords and property management companies can take measures to ensure rent payments are timely and paid in full.

Lease agreements should outline the following items:

• The rent amount
• Rent due date
• Method(s) of payment
• Late fees, if any

Make sure the tenant receives a receipt every time they pay rent. This can help with any potential disputes.

Renters' Guide to Security Deposits

Most landlords require the payment of a deposit before the start of the lease period. Security deposits often run into the thousands, and most renters want a security deposit refund. Tenants should take precautions to ensure they receive a full security deposit return.

Most states require the landlord to deposit this money in an interest-bearing bank account. The tenant gets any interest collected during the lease term.

Ask for Receipts

As a tenant, make no assumptions. Get a written receipt for the security deposit and last month's rent, if applicable.

The written receipt should include the following:

• Amount paid
• Date of payment
• Purpose of the payment (i.e., "security deposit")
• The names of the parties involved
• The landlord or property manager's signature

Tenants should check local laws to ensure their landlord is not overcharging for a security deposit.

Inspect the Property at Move-In

Note the condition of the rental unit before moving in. Some landlords or property managers will provide an inspection form. If they don't, the tenant should document the rental property's condition through photos, video, and notes. Afterward, the tenant should give the landlord a copy and keep one for themselves.

Take photographs where necessary, document any issues, and have the landlord sign off. That way, the landlord cannot charge you for damage that existed before your lease.

Protect the Return of Your Security Deposit

During the lease term, tenants should keep the rental unit in good condition. Notify the landlord immediately if the unit needs necessary repairs. The lease agreement should include details on who and how to request repairs. Keep copies of all requests and documentation in case of a security deposit dispute.

Take Proactive Move-Out Steps

At least a few weeks before the end of the tenancy, the tenant should give the landlord written notice of their move. This allows the landlord to prepare for a subsequent tenant and to release the security deposit.

You can use a letter for written notice, which should include the following:

• Date of departure from the rental unit
• Proposed dates for the final walkthrough
• Your forwarding address for the security deposit refund and final utility bills
• A reliable phone number to contact you
• Request for return of security deposit

To collect their full security deposit, tenants should follow their lease and local law. This includes cleaning the rental property and completing a move-out inspection with the landlord. They should take pictures or a video to back up the assessment. If the apartment is unclean or damaged, the landlord may use the security deposit to cover the cost of repairs.

Check Security Deposit Deductions

If the landlord makes any deductions from the security deposit, they must give the tenant an itemized statement. This itemized list should include all the deductions needed in the rental unit.

The following is a list of possible deductions:

• Unpaid rent
• Unpaid utilities
• Property damage
• Professional cleaning

Once the tenant receives your security deposit, check any deductions, and ensure your landlord has included any interest accrued. If you have any issues with getting your security deposit back, you can sue your landlord in small claims court.

Rent and Security Deposit Disputes

Unpaid rent, rent increases, and the full return of a security deposit are common sources of landlord-tenant disputes. Both parties should understand their options for resolving them and the related laws.

If the landlord does not return the tenant's security deposit, the tenant can file a suit in small claims court. Tenants can also challenge items the landlord deducts from the deposit. If the tenant prevails, the court could award the tenant three times the amount of the security deposit and attorney's fees, if applicable.

Legal Advice for Rent and Security Deposit Issues

Landlord-tenant laws are complex. If your landlord won't return your security deposit, a qualified local landlord-tenant attorney can help.