Security Deposit

A security deposit is a sum of money that renters have to provide to their landlord or property manager before moving into a new apartment. It serves as a protective measure in case tenants cause damage to the apartment or don’t pay their rent.

Have more questions about security deposits and how they work? You’re in luck.

What’s the security deposit for?

Landlords can use the security deposit in order to protect themselves against financial losses they might suffer from their tenant’s behavior, such as repairing damage to the apartment or covering rent payments.

Arguably, the security deposit also increases the tenant’s desire to keep their apartment in good shape, and it incentivizes against negligence.

The good news is that if you fulfill the conditions in your lease, pay your rent on time, and don’t accidentally damage your rental (beyond expected wear and tear!), you are entitled to receive your full security deposit back once you move out. 

Pro tip: Take a closer look at your lease agreement to check the exact terms around your security deposit, such as where the money will be held, and reasons for any potential deductions.

How much is the security deposit?

The simple answer is: A security deposit is whatever amount you agree with your landlord on. There are limitations though, depending on your state’s laws. In many states the maximum amount your landlord can ask you to pay is equivalent to one, two, or three months of rent. 

In New York, landlords can require their tenants to pay a security deposit that equals up to one month’s rent, whereas in California, it’s either two or three months (depending on whether the apartment is furnished or not, as one downside of furnished rentals is they may come with a bigger security deposit).

And to complicate things further: In some states such as Texas and Ohio, there are no regulations regarding the maximum security deposit amount.

Apart from the state you live in (and how scrupulous your landlord is!), here are some additional factors that might influence the amount you need to pay as a security deposit:

• Quality of the rental property (plus any amenities it has)
• Amount of rent you pay
• Whether or not you have pets.  In some states you have to pay an extra deposit to cover potential damages your fur fam might cause.
• Credit score & employment history. Lower credit scores might mean a higher security deposit, as the risk of non-payment of rent is slightly higher.

So far, so good. But what happens if your landlord decides to raise your rent? In this case, you might have to top up your security deposit by the same percentage. (However, make sure to check if you live in a rent-stabilized apartment…if you do, your landlord is only able to raise your rent by a certain amount in any given year.)

How do security deposits work?

From when you need to pay it to how you can get your deposit back, here’s what you need to know about how security deposits work.

When do you need to pay your security deposit?

You need to pay the security deposit before you move into your new apartment, before you receive your new set of apartment keys.

The payment itself can take on several forms: You can either initiate a money order or electronic payment, or hand over a good old cashier’s check to your landlord.

Where does your security deposit go after you’ve paid it to your landlord?

It depends on the state you live in. However, it is common in many states that the security deposit is held in an interest-bearing account that is separate from your landlord’s daily account, but that he or she can access in certain justified cases.

After receiving your deposit, most states require the landlord to provide a receipt to you stating the amount of the deposit as well as details of the account where the security deposit is held. In many cases, you’re also entitled to receive back any interest that was accrued on the deposit during the term of your lease.

When will you get your security deposit back?

This again depends on the state laws and can range from between 14 and 60 days after your lease is up.

Should the landlord decide to keep your deposit, they have to provide an explanation as to why they’re doing so. In some states, they have to provide an itemized list of damages and corresponding repair receipts.

5 reasons your landlord can keep your security deposit

There are a few scenarios in which your landlord might be compelled to keep a portion of your security deposit—or even the full deposit.

1. Damages caused to the rental apartment

Pretty self-explanatory. However, damages renters cause to the apartment must  go beyond normal wear and tear. Anything that’s a result of simply living in the apartment—faded wallpaper, for instance, or normal signs of foot traffic on your parquet floor—wouldn’t be a reason to keep a deposit.  If you accidentally knock a big hole in the wall or break your bedroom door, your landlord might keep parts of the sum to cover the cost of repairs.

2. Damages to furniture in a furnished apartment

If you accidentally break one of the vintage armchairs in your rental flat, your landlord might use parts of the security deposit for the repairs or replacements.

3. Damages caused by your pet

If your cat got too excited and used the door frame as a scratching post, you can expect less of the original security deposit back.

4. Unpaid rent

If your lease is up, and you’re overdue on rent, your landlord will probably subtract the respective amount from your security deposit.

5. Apartment left in an unacceptable condition

Once the time to move out has come, you need to make sure that the apartment is spotless (or at the very least, in the same shape it was in when you moved in—this is something you can discuss with the landlord). If you’ve left the place in a bad condition, for instance very dirty or messy, your landlord might subtract some deposit money for cleaning up and getting rid of your mess.

Even if the landlord does use some money for repairs and a cleaning crew, they should transfer the remaining sum back to you. 

How can you get your security deposit back?

If all goes well, you should get your deposit back automatically. That’s the best case scenario.

However, there are steps you can take to ensure that everything will go according to plan:

• Document the move-in and move-out condition. Snap some pictures of the apartment as soon as you move in, documenting any damages—like scratches on the wall, or a broken stove burner. Email your landlord an itemized list of any damage, so that you can’t be blamed for anything later on. Likewise, do a self-inspection of your apartment when you move out, and take photos again.
• Make sure to keep up with all necessary repairs during your stay, so potential damages won’t get any worse over time. Or at least flag them to your landlord, so he or she can take care of them.
• Clean the apartment thoroughly before you leave.
• Make sure you’ve settled your accounts and have paid all your bills and rent.

But what happens, if the landlord doesn’t agree to pay back your (well-deserved) security deposit?

What if the landlord doesn’t give back the deposit?

If your landlord or management company is withholding a deposit that you’re entitled to, there are several steps you can take.

• Get in touch with your landlord and try to re-open and discuss the issue—calmly, and with empathy. Sounds too easy… and you might be right! But there’s a slight chance that there’s been a misunderstanding, so why not try resolving it with a peaceful tête-à-tête?
• Draft a formal letter to state your case and to explain why you should receive all your money back. To really cover your back, send it via certified mail.
• Definitely make sure to include the pictures you’ve taken of the apartment and add in any information that you think could support your case. In addition, include the address and account number your money should go to and the best way the landlord can reach you.
• Hire a mediator to assist you during the negotiation process with your landlord.
• Everyone has a story about a crooked or unfair landlord. It’s possible that your landlord withheld your security deposit for dishonest reasons. If so, file a lawsuit in small claims court; if you’re a resident of NY, you can file a complaint with the Consumer Frauds and Protection Bureau of the New York State Attorney General – the upside: no need to hire your personal lawyer.