If you have rented a home, then you must be familiar with paying security deposits. It is a one-time refundable sum of money that a landlord will collect from the tenant in addition to the tenant’s first month’s rent. The reason behind the collection of a security deposit is that it helps to protect the landlord financially in case the tenant breaks something or causes damage to the landlord’s property during the tenant’s stay. One of the worst scenarios might be that the tenant might not be able to pay the rent for a certain month.
Here are the five basic things that a landlord and a tenant should know about security deposits:
- How much to chargeKnowing legality when it comes to security deposits is a must. A tenant should be aware that some states allow the landlord to collect security deposits and the amount will greatly depend on the location of the rental property. However, in some states, landlords are given the chance to decide on the amount of their security deposits. At the end, the charge will greatly depend on the agreement between the landlord and the tenant because a tenant can always ask for a lesser amount and everything can be settled through a proper agreement. In Virginia and Maryland, the landlord can collect up to two month’s rent for the security deposit. In DC, the maximum a landlord can collect is an amount equal to one month’s rent.
- When are deposits due?Allowing a tenant to move into the landlord’s property without paying the full amount of security deposit is a big “no.” The landlord may suffer the consequence the moment the tenant decides to move out all of a sudden. More so, it will leave the landlord vulnerable at times that the tenant causes damage to the property, whether intentionally or accidentally. So, for the benefit of the landlord, it is always better to collect the full amount of security deposit before letting the tenant move in.
- Where are the deposits held?
Some states are quite strict when it comes to security deposits. They require the landlord to deposit the money in a separate interest-bearing account. In fact, some states would require landlords to give tenants a security deposit receipt within 30 days of moving in. The receipt should identify the bank where the deposits are being held and the annual interest rate.
When to keep deposits
Some reasons for keeping the deposits include damage in the apartment, in excess of normal wear and tear, during the tenant’s stay and nonpayment of rent. However, one thing is for sure, landlords are not allowed to keep a security deposit whenever they feel like it.