What is a security deposit?

If you’ve ever rented a home or an apartment, you’re likely familiar with a fee known as a security deposit. It’s just one of several sums of money tenants are expected to pay their landlords as part of their rental contract before tenants can officially move in.

If you’re newer to the apartment search and wondering what a security deposit is (and why you have to pay one), you’re not alone. In this article, we’ll provide the information you need to know everything about security deposits, from how much you owe to how they work.

What is a security deposit?

In short, a security deposit is a fixed payment paid by the tenant to the landlord as part of their rental agreement and the total deposit is due before moving in. It’s money that’s used by the landlord as a form of insurance to protect themselves against property damage caused by the tenant or a missed rent payment.

On average, how much you should charge for a security deposit will vary depending on the state. In California, for example, a landlord can’t charge more than two months’ worth of rent for unfurnished units and up to three months’ rent for a furnished apartment. But in states like Illinois and Colorado, there are no legal limits to how much a landlord can charge for a security deposit.

Depending on the contract, security deposits may or may not be refundable. If all goes well, a tenant will receive their entire security deposit at the end of their lease. On the other hand, if the tenant fails to pay rent or damages the unit, the landlord may use part or all of the security deposit to cover the unpaid rent or cost of repairs. For tenants, there’s a strong incentive to keep the apartment in good condition and pay on time to ensure they get their entire deposit back when they move out.

What factors influence the amount of a security deposit?

While it’s common for landlords to charge one to two months’ rent for the security deposit, there are several other factors that influence the total deposit amount.

The location of a property, market conditions, and even your credit score can be factored into a landlord’s decision about how much to charge. Whether or not an apartment is rent controlled or subject to the Rent Stabilization Ordinance (RSO) also must be taken into consideration by the landlord. In New York, for example, landlords of rent regulated apartments can’t charge more than one month’s rent for a security deposit and it must be kept in an interest-bearing account in an NYS bank. Similarly, landlords of subsidized or public housing in Illinois may only charge a deposit amount similar to the amounts charged by private landlords in the area.

What can a landlord use the security deposit for?

Landlords will generally use a tenant’s security deposit to cover two things: to fix property damage and to cover any unpaid rent for the month. But they can also use a portion of the security deposit to cover costs related to unpaid utilities, furniture replacements, cleaning fees, and the removal of items left behind. Depending on the rental agreement, a landlord can even use the security deposit if a tenant breaks his or her lease early.

There are also restrictions on what landlords can deduct from a security deposit. In California, for example, landlords may not use part or all of a security deposit to cover COVID-19 rental debt. Additionally, landlords may not use a security deposit to cover costs that aren’t explicitly stated in the rental lease agreements or for repairs as a result of ordinary wear and tear.

How do I get my entire security deposit back?

Assuming there’s no property damage or major cleanup required, tenants can expect their security deposit refunded anywhere from 14 to 60 days, depending on local regulations. In New York, tenants in units that aren’t rent stabilized or controlled are entitled to their refund within 14 days of moving out while in California, landlords must return deposits within 21 days after moving out.

In addition to paying your rent on time and generally being a good tenant, here are several things you can do to ensure you get refunded your entire security deposit at the end of your lease:

• Take thorough inventory of the unit before you move in—After you’ve read through your lease agreement, you’ll likely receive a move-in condition checklist to review and complete. In addition to confirming any documented damage, take note of and photograph anything that isn’t listed in the checklist. If your landlord doesn’t provide you with an inspection list, you can create your own to share with the landlord once you’ve had a chance to thoroughly inspect your apartment.
  
  
• Repair any damage as it occurs—One of the main reasons landlords ask for a deposit is to use that money toward any repairs after you move out. Rather than wait for your landlord to fix things around the home, consider handling minor fixes (especially cosmetic) by yourself. Fill any holes left by hanging photos or art; replace broken handles or light fixtures; and restore the walls to the original paint color if you painted over them.
  
  
• Don’t leave items behind—Before handing over your apartment keys, give your unit one final sweep and remove any items that didn’t come with the apartment when you moved in. Most landlords will deduct from your security deposit if you leave furniture, trash, or other items in the unit that they have to remove themselves. It also never hurts to give your apartment a final deep clean to ensure nothing is left behind.
  
  
• Take pictures after moving out—In addition to taking photos of the unit when you first move in, consider documenting the state of the apartment after you’ve cleaned it out and are ready to vacate. In extreme cases, these photos will serve as proof that you left the unit in the condition you reported it to be in and protect you from any claims the landlord may try to make.
  
  
• Request a move-out walkthrough—It never hurts to schedule a move-out inspection with your landlord so you can walk them through the condition of your apartment. If your landlord or property manager hasn’t scheduled one, consider reaching out to ask for one about a week or two before your move-out date. Use this move-out walkthrough to ask what other repairs you may need to make or get confirmation from the landlord that the apartment is in good condition and you’ll receive your entire security deposit back.

What if my landlord refuses to return my security deposit?

In the rare instance your landlord or property manager refuses to refund your security deposit, there are several actions you can take to get your money back.

The first step is to read up on your local laws to see what rights you are entitled to as a tenant. You may also want to review your lease agreement to see if there’s any requirement about how long you must stay as a tenant in order to recoup your entire deposit. For example: if you break your lease early, you may be forfeiting all rights to your security deposit.

In most areas, the next step you’d take is to reach out to your landlord via phone call or letter and citing the terms of your lease to ask for your deposit back. Tenants in Colorado, for example, are legally entitled to sue their landlord for three times the amount of any deposit that is wrongfully withheld. Similarly, if a landlord fails to return a tenant’s security deposit in Massachusetts, the tenant must go to court to get their money back.

The bottom line about security deposits

While it’s no secret moving is expensive, it is possible to recoup at least the entirety of your security deposit to lessen the blow. Before moving in, take the time to read through your entire lease agreement and learn what landlords can and can’t use a security deposit for. As a tenant, prioritize keeping your apartment in good condition and understand what legal protections are in place to ensure you get your money back. With a bit of care and due diligence, tenants can maintain a solid relationship with their landlords and guarantee their full security deposit refund when they move out.