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Security Deposit Facts You Should Know
Updated: Dec 21, 2022
What is security (rental) deposit?
A security deposit is a refundable sum of money provided by a tenant to a landlord to compensate the landlord for possible loss or damage. It is usually paid at the time of move-in to cover any future damages that may be caused during the rental period. The tenant is entitled to have the money (or portions of it) back if the property is not damaged. Security deposits do not generally apply to short-term rentals (the rental period does not exceed 30 days).
It can be labeled as "pet fee", "cleaning fee", "move-in fee" or "last month's rent", but is considered a security deposit as long as it matches the requirements and what it is used for (defined below).
What are the requirements for the security deposit collected?
Many state and local laws will have requirements on how much security deposits can be.
Security deposits are always refundable when the exceptions do not apply (more on this below); in fact, a lease could be invalid if it says the deposit is non-refundable.
The deposit cannot be more than two months’ rent (if the property is unfurnished) or three months (if furnished).
An additional deposit and administrative costs may be charged if the tenant uses a waterbed or other bedding with liquid-filing materials.
Special security deposit rules may also apply to certain military members.
What can the security deposit be used for?
A landlord can legally use the security deposit to restore the rental property to its original condition. This includes repairing damages, cleaning, and removing or restoring changes made to the property (ex: repainting a room painted without the permission of the landlord).
Damages: the security deposit to fix damages caused by the tenant, a tenant’s guest, or someone else invited to the home for a specific purpose (like a plumber). However, the important rule about damage is that a landlord can only charge for damages that go beyond “ordinary wear and tear.” Ordinary wear and tear describe small damage that is expected to happen when a property is lived in. For example, a few nail holes would likely be covered, but a large hole in a wall can be fixed with the money from the security deposit.
Cleaning: the security deposit can be used for professionally clean rental property. However, a landlord can only charge to clean the property to the same level of cleanliness it was when the tenant moved in.
Defaults in rent payments: the security deposit can be used to cover non-payments to rent.
Additional items authorized by the rental agreement: the security deposit can also be used for any additional items mentioned in the rental agreement, such as restoring, replacing, or returning furnishing that came with the rental property.
Is there a way to lessen the damage?
A tenant can request an inspection with their landlord, and the tenant can be present for the inspection. This gives the tenant an opportunity to fix the issues pointed out by the landlord and save the tenant some money from the deposit. The tenant must ask for an inspection. If a tenant doesn’t ask, a landlord isn’t required to do a pre-move-out inspection.
At or soon after the inspection, a landlord should give the tenant a list of repairs or cleanings which would be deducted from the deposit by the landlord after moving out. After the inspection, but before the tenant moves out, the tenant has a chance to fix the issues.
When will I get back the security deposit?
This will depend on state and local rules.
The landlord has 21 days after the tenant moves out to return the remaining security deposit if any.
If the landlord uses any of the security deposit for repairs and/or cleaning they must give the tenant a list of what work was done and how much it cost.
Along with the list, the landlord also must include receipts if a professional was hired.
The landlord can also make the repairs themselves or through an employee; but if this option is taken, the landlord must include a description of the work done, the hourly rate, and the length of time work was performed.
If the repair work can’t be completed in 21 days, or a receipt can’t be provided, the landlord can make a “good faith” estimate.
What is NOT a security deposit?
Application screening fees: non-refundable payment charged by the landlord to process a new tenant applicant. This fee cannot be larger than the actual out-of-pocket costs of gathering information about the applicant. This is not considered a security deposit.
Cleaning and repairs made with alterations to the property. For example, if the tenant and landlord agree that a new bath vanity will be installed. The installation of this new vanity will include costs to clean the existing bath area. This cleaning fee cannot be deducted from the security deposit.
What should I do if I believe the landlord owes me money?
Before going to court, be sure of the following:
Collect information on when you first paid your security deposit, including when it was paid, who it was paid to.
The best place to look is your lease or rental agreement. If you don’t have that, look for some type of receipt or other evidence you may have that you paid, this could be a bank statement showing a withdrawal from your account for the amount equal to the security deposit paid.
Evidence showing the condition of the rental property at the time of both move-in and move-out.
You have the contact information of your former landlord including phone number, email, and address (if different from your rental address).
The landlord has your contact information so the security deposit can be sent to that address.
Confirm how much you are really owed by taking into account the repairs the landlord has made and the amount that has already been returned to you.
You have formally asked the landlord to return the remaining security deposit to you using a demand letter.
You paid a $2,000 security deposit at move-in.
$500 was returned to you after your move-out.
The landlord provided receipts for the $500 cleaning cost, and indicated $1000 was used for "damages", but unidentified.
You dispute that $1,000 in damages. You want to be sure that you deduct the $500 returned to you and $500 from the $2,000, so your demand says $1,000 owed to you.
If you believe a landlord has unlawfully withheld all or a portion of your security deposit, you may seek recovery in small claims court.
In California, the disputed amount must be more than $125 in order to recover anything.
If you believe a landlord has unlawfully withheld all or a portion of your security deposit, you may seek recovery in small claims court. In California, the disputed amount must be more than $125 in order to recover anything.
To learn about other important information that should be in your demand letter read 10 Steps to a Strong Demand Letter
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