FAQs Regarding Security Deposits

By E-Renter Tenant Screening
Posted on January 18, 2007 under Rents and Deposits | icon: commentBe the First to Comment

Q.1. What is a security deposit?

Ans. It is money deposited with the landlord to protect him / her, in case a tenant damages the property or fails to pay rent, and is usually paid before a tenant moves in. A landlord can ask for any amount, but certain local laws restrict the deposit to the equivalent of a couple of months rent.

Q. 2. Is security money deposited for pets, cleaning, garage door openers, parking refundable?

Ans. Yes, as long as a tenant fulfils all lease terms and conditions relating to the deposit. A landlord is not legally entitled to keep the money, whether the lease terms it as security deposit or not.

Q.3. Is a landlord required to hold security deposit accounts separately from his / her other assets?

Ans. Only if the law demands it and any landlord who fails to keep tenant security deposits in a separate bank account is liable to pay damages to his / her tenants.

Q. 4. What are the circumstances under which a landlord owes a refund of the security deposit?

Ans. A full or partial refund is owed to the tenant, if rent has been paid in full, including cost of repairs beyond normal wear and tear.

Q. 5. What do standard leases say about security deposits?

Ans. They set forth conditions that require landlords to return security deposit amounts to tenants, however, most leases permit landlords to keep the entire amount or a part of the deposit, in the eventuality a tenant owes rent when moving out, or in case he / she has caused property damage beyond normal wear and tear. A part of it may also be kept to pay for cleaning the rental premises, if the tenant has not adhered to the cleaning clause in the lease.

Q. 6. What can a tenant do, in case the landlord refuses to refund the deposit or refunds too little?

Ans. It is important for the tenant to first negotiate with the landlord, may be through a mediator. Failing that, the matter can be pursued in a small claims court, where people can sue to collect money owed them, without hiring a lawyer.

Both landlord and tenant should be aware that in most states, there are statutes that require landlords to pay interest on security deposits held by them, even though the lease does not say anything about paying interest on security deposits. Some landlords try and get around the law by calling security deposits ‘pre-paid rent’. However, there are laws that explicitly specify even pre-paid rent earns interest.

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