Security Deposit Limits and Uses

Most landlords will require a security deposit before you move in. If you damage the property or leave owing rent, your landlord can use your deposit to cover what you owe. Deposits can amount to several hundreds, or even thousands of dollars and are a major source of friction between landlords and tenants as to the amount charged, whether or not it's refundable, and how it's used.

Fortunately, many states impose fairly strict rules on how landlords can collect and use deposits and how they must return them when tenants move out. Some states and cities even require landlords to put deposits in a separate account and pay interest on them. Landlords who violate security deposit laws are often subject to substantial financial penalties. Here's an overview of the basic rules. See your state security deposit rules, for details on your specific state laws as to limits, whether the landlord must keep your money in a separate account or pay you interest on it, and the deadline for returning the deposit after you leave.

Dollar Limits on Deposits

Half the states don't set any limits on deposits. As with rent, landlords are free to charge as much deposit as they want. But unless the rental market is especially tight, landlords won't find many takers if they charge a security deposit of more than a month or two of rent.

The other half of the states limit the deposit a landlord can collect to an amount equal to one or two months of rent. The deposit limit that applies to you may depend on factors such as:

• your age (senior citizens may have a lower deposit ceiling)
• whether or not the rental unit is furnished (sometimes larger deposits are allowed for furnished apartments)
• whether or not you have a pet (if so, you'll often pay a higher deposit), and
• the number of rental properties the landlord owns (smaller landlords may be exempt from security deposit limits).

How Landlords May Increase Deposits

If you have a fixed-term lease, your landlord may not raise the security deposit during the term of your lease, unless the lease itself allows it (most don't). If you have a month-to-month tenancy, a security deposit can be increased just the same way the rent can be, typically by giving you a written notice 30 days in advance of the change. Of course, if your state regulates the maximum deposit that can be charged, your landlord can't exceed that amount.

How Landlords May Use Deposits

By law in most states, your landlord must refund your deposit promptly after you move out, unless there is a valid reason not to return all or part of it. Most states give landlords a set amount of time (usually from 14 to 30 days) to either return your entire deposit or provide an itemized written statement of deductions and refund the rest. See the related article in this section on getting your security deposit back.

Although state laws vary on the details, your landlord can almost always withhold all or part of the deposit to pay for:

• unpaid rent
• repairing damage to the premises (except for "ordinary wear and tear") that you or a guest caused
• cleaning necessary to restore the rental unit to its condition at the beginning of the tenancy (over and above "ordinary wear and tear"), and
• replacing rental unit property you've taken.

Landlords don't need to wait until you move out to tap into your security deposit. Your landlord may use some of it during your tenancy—for example, because you broke or damaged something and didn't fix or pay for it. After using part of the deposit in this way, the landlord may require you to replenish it.

Nonrefundable Deposits and Fees

Many landlords collect a fee that is not refundable—such as for pets or cleaning. A few states such as California specifically prohibit landlords from charging any fee or deposit that is not refundable, but most state security deposit statutes are silent on the subject of nonrefundable fees or allow them for specific purposes such as cleaning.

If you're being charged a nonrefundable fee, check your state security deposit law to see whether it's legal in your state and, if so, whether the nonrefundable fee counts towards your state's limit, if any. Even if nonrefundable fees are allowed, be sure you're clear on what the fee covers.