The way landlords handle security deposits in the U.S. is highly regulated on a state-by-state basis. Although these laws vary, they typically address three things: collecting, storing, and returning a security deposit. Keep reading for an overview—or choose your state from the drop-down menu above to learn more about the laws where you rent.
There are often limits to how much a landlord can collect for a deposit
In some states, there is a cap on the amount of money a landlord can demand for the security deposit. One month’s rent is the most common and is generally seen as fair. The amount should be clearly stated in a lease or sublet agreement, and both parties should sign the contract.
Landlords may need to hold the deposit in escrow
When something of value is placed into the hands of a neutral third party for safekeeping, it's referred to as escrow. Some states require landlords to hold a security deposit in escrow—for instance, by creating different bank accounts for each property. Others go further and won’t even allow landlords to mix personal assets and security deposits in the same account.
Tenants may have the right to an inspection
Some states require landlords to schedule a walkthrough with their tenant before the move-out date, which gives the tenant time to address any issues that would result in deductions from the security deposit.
Landlords may be asked to provide documentation of damages
In many states, landlords are required to provide a written explanation of any deductions they made from the security deposit. This is intended to prove that they withheld a fair amount of money—and that the damages did, in fact, occur. Landlords may need to collect receipts or quotes received from service providers to deal with any damages the tenant caused. It’s generally against the law to deduct for “normal wear and tear,” such as window shades that have been faded by the sun or carpets that are worn down from years of foot traffic.
The law may establish a timeline for returning the deposit to the tenant
Many states set a specific window during which the security deposit must be returned to the tenant. Thirty days after move-out is common, as is 14 days. There are often penalties if a landlord is late returning the deposit—for instance, they are no longer allowed to deduct for damages to the unit.
The information provided on this website does not, and is not intended to, constitute legal advice.
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