So many people have questions about security deposits, that I decided to write a detailed post on the issue. Please remember, this is general law. You will need to check the law in your jurisdiction, and also, with a landlord/tenant lawyer in your state. Do not assume what I write here works in every situation. This article is for residential security deposits. Commercial law is very different.
What is a Security Deposit?
A security deposit is funds that a landlord holds from a tenant against damage to a rented property. Barring an acceptable reason to keep the security deposit, it must be returned to the tenant when s/he moves out.
Where to Hold Security Deposits
Landlords should check the law about what they have to do with security deposits in their states. In most cases, the landlord must put the deposit in an interest-bearing bank account until the tenant terminates residency. In many states, depending on the length of residency, that interest must be returned to the tenant upon the termination of the lease.
Do Not Think of Security Deposits as Yours
Landlords should not think of security deposits as money that is theirs. Rather, they should think of the deposit as money they are holding for the future. When landlords think security deposits are theirs, they often run into the problem of having trouble giving it up when the lease is over. If landlords remember the money is not theirs and save it properly, they won’t find themselves having trouble returning it when they are required to do so.
Limits on Amount of Security
Landlords should check how many months of security they are allowed to require. Most states only allow one or two months. In Pennsylvania, you may ask for two months in the first year, but then must return the extra month at the end of the first year. In general, if the security deposit matches one month’s rent, and the rent increases, the landlord may request the additional amount. However, after a certain time period passes, it may be impermissible to increase the deposit amount. In Pennsylvania, the time period is five years.
Security Deposits are not Last Month’s Rent
Sometimes, tenants believe that a security deposit can serve as the last month of rent. This is not correct. If a tenant fails to pay their last month of rent, believing that the security deposit will cover it, the landlord may seek to evict them for failure to pay rent during that last month. As noted above, security deposits are money to be held against damages. If the entire deposit is used as last month’s rent, the landlord has no money to hold against damages. If, when you are ready to move out, you want to see if your landlord will accept your security deposit as last month’s rent, ask them. Get the answer in writing. In some states, this may be impermissible.
First, Last, & Security
In many jurisdictions, it is common for a landlord to ask for first and last month’s rent, as well as a security deposit. In such a case, the landlord has your last month’s rent in addition to your security deposit, and you will not need to pay the last month’s rent again. The landlord will still have the security deposit against any damage. Last month’s rent is not normally considered part of the security deposit when calculating how much a landlord may ask for in advance, however, it is critical to check state law.
Pet Security Deposits v. Pet Fees
It is generally legal to charge an additional pet deposit. Pet deposits may be refundable, in which case they are a security deposit, or they may be nonrefundable, in which case they are something else. It is common to call nonrefundable pet fees security deposits, but if they were truly security deposits, they would be refundable. It is also legal to charge additional monthly fees for pets. Check the law in your jurisdiction to determine if there are any limits on pet deposits or fees. Make sure your agreement spells out whether money paid towards pets is refundable. You don’t want a dispute later on.
If your landlord tells you that you can have a pet, make sure it is in the lease. Landlords, protect yourself by mentioning pets in the lease. You don’t need disputes about it later on.
Keep in mind that just because a landlord allows one tenant to have a pet does not mean they have to allow another tenant to do so. Many restrictions are legal, and it is legal to allow animals on a case-by-case basis.
Service Animals & Emotional Support Animals
Service animals and emotional support animals are generally exempt from no pet rules as well as pet security deposits or fees. They are also exempt from breed restrictions and size restrictions. When you think of a service animal or an emotional support animal, think of it as if it is not an animal at all. Think of it, legally speaking, as if it is a tool. This is why landlords may not charge additional fees or deposits for a service animal or emotional support animal under the law.
The laws impacting service animals and emotional support animals are federal in nature, but states may supplement those laws. Landlords are required to make reasonable accommodations related to these animals.
The Process for Exempt Animals
Tenants who have service or emotional support animals should inform their landlords/potential landlords in writing. This should occur before the tenant moves into the residence or obtains the animal. Handling things in advance helps to avoid problems
For a service animal, the landlord may ask if the dog is a service animal and if it is trained to perform a specific task. The landlord may also ask what that task is. Service animals, under federal law, are dogs or miniature horses.
For an emotional support animal, the landlord may request a letter from a doctor stating that the animal is an emotional support animal for the person. Emotional support animals may be any kind of animal. The type of animal may be limited by certain laws. For example, it may be illegal to keep a full-sized horse in a certain type of residence, and under those circumstances, a landlord may refuse a full-sized horse.
Whether the pet is a service animal or an emotional support animal, landlords may not request medical records or specific information about the disability.
Limitations on Service Animal / Emotional Support Animal Laws
There are some limitations to the laws based on the type and number of units in a rental. As such, landlords should check both state and federal laws to see whether they are required to accept service animals or emotional support animals. It is critical for both landlords and tenants to know the law to avoid problems.
Warning about Exempt Animals
Landlords, keep in mind that discriminating against a potential tenant/tenant based on a disability is a violation of the law. Violating laws relating to these animals can result in expensive fines.
Tenants, if your animal is disruptive or causes damage, your landlord may evict you and recover for those damages. When you move out, if your animal caused damages, your landlord may recover for those damages. Please, train your animals so they do not cause problems in your community or for your landlord. Tenants should know that many states are passing laws making it a crime to claim a pet is a service or emotional support animal when it is not. Violating these laws can lead to expensive fines. If your landlord determines you were lying, they may evict you for having the animal. Do not set yourself up for having to get rid of a beloved pet by calling it a service or emotional support animal when it is not.
Returning Security Deposits
When the lease ends, landlords must return the security deposit or provide a written explanation of any amount they are keeping. How much time the landlord has to provide the funds or the explanation will vary by state law. It is common for the period to be 30 days, but some states allow less time. Frequently, if the landlord keeps the money or the explanation beyond the required time, the landlord must return the full deposit, regardless of any damage. In some cases, the landlord will be required to pay double or treble the security deposit if they do not follow the law. As a result, it is critical for both landlords and tenants to know how much time the landlord has to return the deposit, and what kind of accounting they must provide for any money they keep.
Common Security Deposit Mistakes by Landlords
The most common mistake by landlords is the failure to return the money or provide an explanation of withholding within the time allowed. The second most common mistake is to try to charge for reasonable wear and tear. Tenants are not responsible for normal wear and tear.
Another common mistake is seeking to charge full price for used items. Landlords generally can only charge depreciated value based on the remaining life of the item in question. State statutes may not provide specific guidance on how long a carpet or paint should last, but written opinions from judges may provide assistance. Otherwise, it is best to go by what is reasonable. Charging to replace a 15-year-old carpet, even if that carpet was in pristine condition, is unlikely to be acceptable to a judge. Charging to repaint a unit after it was last painted five years ago is unlikely to be acceptable. Generally, carpet lasts five years and paint lasts two.
Landlords may only charge tenants for the actual damage the tenants caused based on the value of the destroyed item or the cost of repairing the damage. The best way to show the value of the destroyed item is to show a receipt for the original item, along with a receipt or estimates for a replacement. The replacement should be similar or the same as the original. Then, figure out the amount of life remaining in the original item, and that is what you should charge the tenant. If you must repair something, have a receipt for the repair or an estimate from a contractor. It is also important to have proof of the damage, such as pictures or video. If you perform repair work on your own, you may or may not be able to charge for your time. In most cases, you cannot charge for your own time.
You may normally charge for excessive dirt. Many landlords include an addendum in the lease spelling out what they will charge for uncleaned items. Again, you will need proof of the dirt. Take pictures.
Common Mistakes by Tenants Impacting Security Deposit Return
Obviously, the first mistake a tenant can make is to damage the property. Another is to fail to leave the property clean and empty of their possessions. Landlords may charge if an apartment is not left reasonably clean. They may also charge to dispose of possessions left behind. State law will impact what landlords may do with abandoned property.
Understand that while you live in the residence, you must inform the landlord of any problems that could become worse in a timely fashion. Water damage is an especially serious issue, and your failure to report it in a timely fashion could cause you to become responsible for damage that could have been prevented.
Evidence Before You Move in & After You Move Out
The key to successfully obtaining a return of your deposit, aside from keeping the residence in good order, is to have proof of the condition of the residence before you moved in and after you move out. Take pictures and make a video recording. When you move in, take pictures of any damage you see. When you move out, video the entire apartment from floor to ceiling. If you are responsible for the outside of the property, record that as well. When you move in, you should provide a list of any damaged items to your landlord within a week or two. Make certain you keep a copy of that list. You should do a walkthrough with your landlord when you move in, and again when you move out. Keep in mind just because something was not found during a walkthrough after you move out, that does not mean you will not be responsible for it.
Return the Keys
Sometimes, people forget to return keys when they move out. In addition to being charged a fee to replace the key, some states will allow for a delay in deposit return while you have the key.
Provide an Address
If you do not provide an address when you move out, the landlord will not be responsible for a delay in returning the deposit or providing you with an explanation for keeping your deposit. If, for some reason, you do not want the landlord to have your address, obtain a PO box or a virtual mailbox.
I have provided you with some of the common issues that arise between landlords and tenants when it comes to security deposits. Make sure you research the law in your own jurisdiction before you take any action. In addition, please remember to be fair to each other. Landlords, don’t play games with your tenants’ money. Tenants, if you did the damage, pay for it. It is easy enough to avoid court when people treat each other right.