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Security Deposit Laws

A security deposit is an amount of money the landlord requests of a tenant as reassurance during the lease term. If a tenant leaves without paying the last month's rent or causes property damage, the landlord can use the security deposit as payment of rent or to cover charges.

State law and local landlord-tenant law often regulate security deposits. Security deposit laws can limit the amount of the security deposit, set a time frame for returning a security deposit, and constrain how a landlord can use a security deposit.

This article explores security deposit laws during a standard residential tenancy. It does not cover instances such as an eviction.

What Is a Security Deposit?

Landlords often ask for a security deposit and the last month's rent before a tenant moves into a rental unit. These monies cover the landlord's costs if the tenant moves out early or doesn't clean before vacating the rental unit. After the rental period ends, landlords must return the security deposit, minus the amounts they used to repair the rental unit.

The law and the residential lease agreement are two sources of authority for security deposits.

Security Deposit Law

Security deposit laws protect landlords' and tenants' rights. Security deposits reassure the landlord if the tenant defaults on rent or damages the property. The landlord may use the security deposit to recoup the lost rental income or fix the damage.

In most states, the landlord must place the deposit into an interest-bearing bank account for the entire rental period. In some states, like Maryland, the landlord uses an escrow account to hold the monies.

State laws often contain security deposit limits. Depending on the state, a landlord can charge a tenant a security deposit of one to two times the rent. If the landlord uses the security deposit, they must return any unused portion with an itemized statement of any deductions.

Rental Agreements

Rental agreements are a second source of authority. Residential lease agreements should include clauses covering the return of the security deposit. This clause should state what happens at the end of the tenancy, including the tenant's responsibilities, such as proper notice. Tenants should read all the lease terms to understand their rights and responsibilities.

Inspection Before Move-In

Renters should protect their security deposit by documenting the rental property's condition before they move in. Take pictures and video of any damages. The tenant should examine the property for large holes in the wall and damage to the carpet or floor. They should also note the appliances' condition.

A good inspection will provide detailed information about the damage and the location of the damage. It may include photographs and video of the premises. The landlord and the tenant should both sign the inspection report, and each should receive a copy. Doing this can avoid disputes when the lease ends.

Using a Security Deposit

Each state has different security deposit laws that regulate how a landlord can use the money. In many states, tenants can use the security deposit to cover their final month rather than paying rent. Most states prohibit using the security deposit to cover of "normal wear and tear." This refers to ordinary wear that occurs through regular use. Wear and tear could include a worn-out pathway on the carpet or smudges on the wall.

Normal wear and tear excludes conditions like cigarette burns on a carpet, water damage to a floor from the tenant's neglect, or broken tiles on a kitchen counter. Damage that exceeds the wear that would occur over time is beyond normal wear and tear. The landlord can use the security deposit to repair actual damages.

Landlords may also use the security deposit to clean the rental unit or cover unpaid rent.

Moving Out

Renters have several responsibilities when they are moving out of a rental property. Their first responsibility is to give the landlord written notice that they are vacating the unit. This notice should include the following:

  • The date the renter is leaving
  • A forwarding address where the landlord can send the security deposit
  • Proposed times for a final inspection

Final Inspections

Renters should schedule a final inspection before they move out of a rental property. Some states, like Maryland, have laws governing a final inspection. In Maryland, at least 15 days before the renter leaves, landlords must notify their tenants via certified mail of the date and time of the final inspection. Additionally, the inspection must occur five days before or after the move-out date.

In states without any requirements, renters should conduct their final inspection. They should create a move-out inspection record through pictures, video, and detailed notes. Photos and videos help document the property's condition. The tenant should take notes of normal wear and tear and damage exceeding normal wear, then provide the landlord with a copy of the inspection notes.

Return of the Security Deposit

Each state's security deposit laws identify the time frame to return a tenant's security deposit. If the landlord made any repairs, they must provide the tenant with an itemized statement. That statement should include the damage and the cost of repairs deducted from the security deposit. Landlords must return any unused portion of the security deposit to the tenant.

In many states, landlords must return the security deposit within 14 to 45 days after move-out. The tenant must provide the landlord with a new address to return the security deposit and interest. In many month-to-month leases, landlords must return the security deposit within 30 days.

Small Claims Court

If the landlord doesn't return the security deposit, or if they don't provide an itemized list of deductions, the tenant may seek relief in small claims court. If successful, the tenant can recover two to three times the security deposit, court costs, and attorney fees.

Get Help

If you need help recovering your security deposit, a qualified, local real estate attorney can help. These attorneys understand landlord-tenant law and can answer your questions. Speak to a local landlord-tenant lawyer today.

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