Costs a Landlord Can Deduct From a Tenant's Security Deposit

Almost all landlords collect a security deposit from their new renter at or before move-in day. The security deposit offers financial protection if the tenant fails to pay rent or causes damage to the rental unit.

Ideally, the landlord will return the deposit at the end of the lease term and after the tenant moves out. In reality, landlords and property managers can make deductions from their tenants' security deposits in compliance with their state's security deposit laws.

Security Deposit Basics

A security deposit is the money the landlord collects at the beginning of a lease agreement. State law often determines the amount of security deposit a landlord can collect. For example, in New York State, New York landlords cannot collect a security deposit greater than one month's rent. New York landlords must also place the security deposit in an interest-bearing account.

Last Month's Rent

A security deposit is not synonymous with last month's rent. If a landlord collects last month's rent with a tenant at or before move-in, the landlord or property manager can only use it to cover last month's rent. For more information on the difference between last month's rent and a security deposit, check out this Findlaw article on The Difference Between Last Month's Rent and a Security Deposit.

Moving Out

At the end of the tenancy, tenants should, through a written notice or request, ask for a final walk-through with the landlord or property manager. A landlord can point out minor repairs the tenant can fix before they vacate the rental unit. Many tenants will make those minor repairs to get the total amount of the security deposit returned to them.

Landlord Deductions From a Tenant Security Deposit

State and local laws typically provide guidelines for the return of a security deposit. Landlords can only deduct for property damage above normal wear and tear in the rental property. A few examples of normal wear and tear include the following:

• Broken blinds
• Nail holes
• Faded carpet or floor coverings
• Marks on the wall (landlords typically repaint rental units between tenants)

Major Property Damage

Significant property damage, including intentional damage, like holes in the wall, often warrants a deduction from the tenant's security deposit. Landlords often make deductions for the following:

• Unpaid rent
• Cleaning costs
• Costs related to nonpayment of rent

The landlord must return any portion of the deposit after security deposit deductions. New York landlords can keep 1% of the security deposit for administrative fees. Landlords should create a list of the repairs (including cost of repairs and cleaning costs) to include in an itemized statement. Landlords should send the itemized statement to the tenant via certified mail with a return receipt. The return receipt serves as proof the former tenant received the statement.

Failure to follow security deposit laws can lead to a lawsuit in small claims court, which is often costly if the court favors the former tenant.

Get Legal Help

Whether you are a renter or a landlord, you don't have to face these issues alone. An experienced landlord-tenant attorney can help. They are experts in landlord-tenant law and can provide solid legal advice. Speak to an experienced landlord-tenant attorney today.