Security Deposits - Everything You Need to Know
Updated: May 3, 2018
If you've ever rented an apartment, you have almost certainly handed over a sizable chunk of money (1-3 months rent) to your landlord before moving in. Annoying as they may be, "security deposits" are common and standard all across the United States. But as with any rental policy, it pays to know what it is and how it operates before signing on the dotted line.
We've gathered top questions from renters around the country, and compiled must-know answers about that pesky security deposit you're about to dish out for your new digs.
What is a Security Deposit?
Security deposits are a form of protection landlords put in place to cover any damage caused by tenants beyond normal wear and tear. This is an important distinction. Normal fading or chipping of paint, or small nail holes from hanging a painting are all normal. That big hole your college friend left as a parting gift when visiting last weekend...not so much. Major repairs caused by the tenant (or their friends) will come out of the security deposit. But that's not all. Security deposits not only protect you from damage liabilities, but can also help demonstrate your financial stability - making you a more attractive applicant.
Who's Money is It?
The security deposit is YOUR MONEY no ands or buts about it. Your security deposit funds (in their entirety) are held in an escrow account, which means your landlord cannot cash it out for a fun weekend in Vegas...as much as they want to. In some cities, like San Francisco, your landlord must also pay you interest every year you rent their property, and return the deposit when you move out (minus any deductions caused by damage or late payments of course). Have not fear, the money is yours. And if you're a respectful tenant who takes care of the property, you should expect to get it back nearly or completely in full.
What Can My Landlord Deduct For?
Again, it's important to remember that any property (be it a clothing, a car, or that shiny new apartment you just found on LIVV.co) will go through normal wear and tear. That means your landlord typically cannot deduct for a fresh coat of paint, patching nail holes, or cleaning your carpet. Instead, security deposits are used to cover damage caused by neglect, misuse and other gross misconduct. The line between wear and tear, and damage caused by neglect can be a fine one, so be sure to talk to your landlord about their policies and exceptions before signing the contract. And by all means, take photos and keep an itemized list of existing damages so you have a clear record in case of disagreement.
How Long Does it Take to Get My Security Deposit Back?
The length of time it takes to receive your security deposit depends on the state you live in. Some states mandate landlords to return deposits within 30 days of moving out, some within 15 days, and others just as soon as they receive a forwarding address from the departing tenant. If the landlord does not abide by these government mandated timelines, they may be penalized by the state. We have seen instances of rental agencies filing for bankruptcy and withholding security deposits longer than anticipated - in which case you need to get involved and fight for your right (to security deposit). Advocate for your rights, and don't passively wait for your money to return. If your landlord withholds your security deposit past the legal deadline, you may consider sending a notice of action (make sure it is written not just handled over the phone).
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