One of the most important aspects of a rental lease is the security deposit. To the tenant, it’s one of the countless fees to deal with when negotiating a lease, and to the landlord, it’s an insurance measure to protect property and finances. Here are some tips for handling the security deposit from both sides, whether you’re a landlord or a prospective tenant.
What Is a Security Deposit?
To better understand how to handle a security deposit, you must first understand exactly what a security deposit is. Put simply, it’s a particular sum of money that the tenant pays to the landlord with the intent of covering any potential costs the rented property may incur due to the tenant’s occupancy. Typically, it is expected that the security deposit will be returned to the tenant at the end of the lease term, provided their occupancy didn’t cause any damage to the property’s value.
There are more specific legal regulations regarding security deposits in some areas; other areas can leave it up to the discretion of the landlord. No-limit areas can feature security deposits that are widely variant, but more regulated areas would charge anywhere between one to three months’ rent in many cases. In some areas, landlords must take extra steps to preserve the deposit by placing it in an interest-bearing account separate from other accounts. Also in some areas, within 30 days, the tenant must be issued a receipt that details the location of the deposit.
Setting the Cost
Landlords in regulated and unregulated areas both must do some work to set the cost of security deposits. Often, the precise amount of an individual security deposit will vary based on a variety of factors. The security deposit can be determined as a percentage of anywhere from one to several months’ rent, so it can vary based on the quality of the accommodation. More luxury amenities can drive up the cost of a security deposit as well.
Aside from the rental property, the security deposit cost can be influenced by the tenants themselves. Tenants with lower credit scores or criminal history may be viewed as bigger risks to the landlord, so they may incur larger security deposits compared to other tenants of the same kind of property. Additionally, tenants with pets can warrant a larger security deposit, since pets pose a greater risk of damaging the property.
Paying the Deposit
As a tenant, you’re obligated to pay a security deposit in the vast majority of rental agreements. If you don’t have sufficient funds to cover the deposit by the move-in date, you don’t have enough funds to move. In the overwhelming majority of cases, a full security deposit must be submitted before you move in.
When a landlord allows someone to move in without paying the full security deposit, it increases the chances that full payment won’t be made. It also reduces the loss for the tenant should they damage the property. Put simply, the landlord is financially vulnerable unless he or she collects the entire deposit upfront.
Getting Back the Deposit
A security deposit is meant to be a refundable investment, so any tenant who maintains the rental property and obeys the rules of their lease should expect to get back the security deposit. Since a security deposit is meant to ensure a lease term, don’t expect to get it back until your lease is over.
The time you have to wait before the deposit is returned can vary based on the details of your lease agreement and the legal regulations in your state. Generally, you should get your deposit back within 30 days, but some areas allow up to 60 days for your landlord to deliver. If your deposit was sitting in an interest-bearing account, in some states, you may also be entitled to that interest. Other states only require the landlord to give back your original deposit while they keep the accrued interest.
Reasons for Not Returning the Full Deposit
Given that a security deposit is an insurance measure, it’s meant to cover the costs of lost value to the property. If there is a loss of value, the security deposit will, at least, be returned in part with the rest used to cover that loss. To avoid only being repaid a portion of your security deposit, it’s in your best interest as a tenant to leave the apartment in excellent condition.
Several reasons and justifications can be used to not return a full deposit. Something as small as trash left on the floor can be used as justification to take out a cleaning fee. Of course, more overt damage, like a broken shelf or holes in the wall from hanging pictures, can justify not returning the full deposit as well.
How to Increase Your Chances of Getting Back the Deposit
If you’re a tenant seeking to get back the full deposit, there are a few things you can do to increase your chances. Since so much of the deposit’s return is left up to the landlord’s discretion, there’s no way to guarantee a full return, but there are ways to make it a more likely outcome.
First, make sure you do a walk-through with your landlord shortly after moving in to take note of any damages you see. When it’s time to move out, conduct a similar walk-through to ensure that you’re not held responsible for the pre-existing damage. Additionally, make sure you clean and repair any parts of the rental as needed before moving out. Don’t forget to return the keys as well.
Now that you have tips for handling the security deposit, it’s time to find a rental or tenant suitable for your needs. With Zumper, renters can explore available properties and landlords can make listings. Contact us today to learn more about how we can help with every step of the process.
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