Security deposit is sum of money in a rental agreement paid by the tenant (renter) to the landlord as proof of intent to move-in and for the cost of repair specified in the lease. Security deposits can either be refundable or nonrefundable depending on the lease agreement. This payment is to be kept separately and must be returned to the tenant if no violations of the lease has occurred, but if the tenant caused damage to the premises or otherwise violated some terms of the lease check the rules in your state before keeping your tenant’s deposit to make sure that the amount you’re asking is within the law.
5 Common Reasons a Landlord may keep a Tenant’s Deposit
A landlord is permitted to keep all or the portion of the tenant’s deposit for a number of reasons. Generally, there are at least five situations for allowable deductions on security deposits. A deposit made to the property belongs to the tenant but the landlord is permitted by law to keep the tenant’s deposit in the following situations…
Nonpayment of Rent
There are limitations to what situations the landlord is not obligated to return a tenant’s deposit. One common circumstance is when a tenant failed to fulfill his or her lease obligation to pay the rent. While some landlords and management companies offer rent relief due to unforeseen events, landlords still has the right to deduct the amount of the unpaid rent from the tenant’s security deposit after a tenant has left.
Early Termination of the Lease Agreement
When a tenant vacates the unit without giving any advance notice, the landlord might be entitled to keeping the tenant’s entire deposit. The lease must state that failure to give advance notice will result in a loss of security deposit or additional costs because the landlord must cover the remaining time to find someone to fill the property. Early termination of the lease agreement can be ground for the landlord to keep the deposit in order to recover from the breach of contract.
Damage to the Property
A tenant can be held liable if the landlord find any damage in the rental unit that is not from normal wear and tear of the rental property. The landlord can deduct the cost of damage for a hole in the wall or broken shower head, but not for the discoloration of the curtains or paints over the years. The landlord can charge the tenant for some cost to cover for the repair.
Unpaid Utilities and Bills
Another circumstance to keep a tenant’s deposit is if they fail to pay their utility bills. The landlord could tap the deposit to cover utility and other bills missed especially if the tenant ends the lease period earlier and terminates the rental contract. In addition to the unpaid rent and other fees, the total amount may increase if the landlord decides to take the tenant to court because of the lawyer and court fees.
Beyond Normal Cleaning Costs
The tenant is not responsible for conditions that existed before moving, but leaving the property in an unhygienic or unsafe condition is another reason landlords can keep or deduct from the tenant’s deposit. Excessive dirtiness like accumulation of dirt, stain or grease that weren’t there when the tenancy began will allow the landlord to deduct money to clean the rental unit.
Your lease agreement must stipulate deposit deductions to repair, restore or replace any damage to the property. In doing so, always keep in mind the state laws and procedure when deducting a portion or keeping the entire deposit. Keeping tenant’s deposit can be a source of conflict between tenants and landlords or property management, so follow the proper procedure in making reasonable deductions to minimize any dispute in the end.
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