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What is a Security Deposit? Everything You Need to Know

What is a Security Deposit? Everything You Need to Know

If you are planning to start looking for your first apartment, you will be asked: “What is a deposit?” – you might think. It is one of the many costs that often arise when you move into a new rental home. You may also get your down payment and your monthly rent for the past month.

These lists of potential payments can be onerous, and knowing more information can help you choose a rental that fits your needs and budget. From this guide, you can learn about the definition of a deposit, how a deposit works, its cost, and frequently asked questions about a deposit.

 

Definitions and examples of security deposits.

The broad definition of a deposit is money paid to another person as part of a contract to use property or services. More specific definitions of deposit are used when it comes to rental property.

According to the American Bar Association, a deposit is defined as “money to protect the landlord if the tenant damages the property or fails to pay rent.” When you rent an apartment, the landlord may require a deposit before you move in. Depending on where you live and local rent laws, you can set a rent limit of 1-2 months.1

The deposit provides financial assistance to the landlord in the event of a lease violation, eviction, or damage to the property. If your lease allows, the landlord can keep your deposit to compensate you for any monetary loss or damage caused by your actions.

However, renting is not the only time you may be asked for a deposit. You may also be asked to make a deposit for the following items:

I blocked my credit card.
Cell phone service.
Cable TV and Internet access.
Utilities.
Tuition and other fees for higher education.
Car rentals.
Vacation rentals.

Moving truck rentals.
In these circumstances, the need for a deposit may vary depending on your company policy and credit rating. In addition, your company policy may or may not specify when the deposit may or may not be refundable.

What do I need to know about the security deposit?

The lease agreement should contain all pertinent information about the deposit, such as the amount of the deposit, the expiration date, conditions, whether the deposit amount is refundable to the landlord or why it is not refundable.

The deposit should usually be paid by cashier’s check, money order, or electronic payment. These methods allow you to use cash at the time of the lease.

Some states require landlords to keep the deposit in an interest-bearing bank account. Consequently, interest may accrue on the deposit.

Some states require landlords to give tenants a deposit slip at a certain time, such as within 30 days.

Just as some states limit the amount of the deposit, state policies vary depending on when the deposit must be returned to the tenant. The law provides a time limit for the legal return of the deposit. For example, a New York landlord must return the deposit within 14 days, but an Alabama landlord can process a return within 60 days. Check your state’s laws.

The landlord may also decide that a deposit can be applied to the last month’s rent. In this case, the tenant is not responsible for paying the last rent, and the landlord will not refund the deposit once the tenant moves in.

If the landlord chooses to keep some or all of the deposit, the landlord must provide a detailed statement stating why the amount was withheld.

Is there a reason why the landlord will not return the deposit?

The tenant does not leave the apartment or house clean and uncovered when moving out.
Tenants have made adjustments or improvements without the landlord’s permission.
The property has been damaged beyond normal wear and tear, and the tenant has not repaid the damage.
This happens when utility bills are included in the rent and tenants accumulate above-average utility bills.
When tenants vacate the premises, they do not remove all personal belongings.
Property owners schedule an inspection when they move out and tenants don’t attend.
Tenants have not paid rent in the past month.
The landlord does not return all keys to the property to the landlord.

How much is the security deposit?

Some states have no limit on how much a property manager or landlord can charge a tenant, but most states limit the deposit to one month’s rent. However, some states allow landlords and property managers to charge three months’ rent for the deposit. You can even find an apartment building that only requires $100 as a deposit. How much the deposit costs depends on the individual’s request.

Can I get my security deposit back?

If you are in compliance with your lease to maintain the rental property and the landlord is in compliance with the law in your state of residence in connection with the return of the deposit, you can get your deposit back. State laws vary in determining how much a landlord can charge for the deposit and how the deposit can be used. For example, a deposit equivalent to one month’s rent is the general rule, but some states allow a deposit equivalent to a maximum of three months’ rent. Other state laws do not limit the amount of the deposit a landlord can claim. The state in which you live may also allow your landlord to use some or all of your deposit to pay rent, unpaid utility bills, and property cleaning. You don’t just use it to repair the damage you’ve done to the property.

I get my security deposit back.

If you pay your rent on time and vacate the house nicely, you can usually get your deposit back. However, if the property owner needs to do a deep cleaning, repaint the walls, replace damaged floors or appliances, repair clogged or leaking pipes or other repairs, they may not get their money back. Also, if you miss rent or pay late, you may end up deducting late fees from your deposit, even if you make all your payments.

Sometimes the owner or property management company may not return the deposit. We recommend that you read your lease or other rental documents carefully to understand exactly how the deposit works and how you can expect a refund.

When will I pay the security deposit?

Generally, landlords and property managers require a deposit to be paid before tenants receive a key. The deposit is paid at the time the lease is signed by money order, cashier’s check, or ACH (electronic payment). Make sure you are prepared to pay the deposit and any other fees due that day before signing the lease.

When can I get my security deposit back?

The deposit can be returned anytime between 30 and 60 days after your lease expires and you move out of the apartment, in accordance with state law. The deposit is usually returned by mail in the form of a check, so let the property manager or landlord know your new address to make sure it gets delivered quickly!

How long will it take to get my security deposit back?

Depending on your landlord’s compliance, you may receive your deposit within 72 hours or you may have to wait up to 60 days, depending on your state’s rental laws. Generally, short return periods are allowed in situations where the tenant must leave without fault, such as due to hazardous conditions or building fault. State law specifically defines how long the landlord has to return the deposit after the tenant leaves the house. In some states, you can get your deposit back faster by simply sending the appropriate notice of termination to the tenant. In other states, you may be required by law to attend a graduation exam. All of this information can be found by searching your state’s deposit laws online or by contacting your local housing authority.

Can I get my security deposit back if I don’t move in?

If you do not move into the rental property, you can get your deposit back in full. All rental terms and conditions, including the deposit, must be in writing. Some fees may not be refunded in full or in part. For example, money paid to landlords for owning a property. If you change your mind and the landlord owns the property in good faith, he may be entitled to keep all or part of the money because of the rent he might lose from other potential tenants. However, the lease should state that you paid a non-refundable fee for keeping the property instead of a deposit. Fees and deposits are not the same thing. Your local housing authority can answer the question of whether your state will allow a refund of the deposit if you do not move into the property.

Written by hoangphat

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