A security deposit is money given to your landlord at the start of your lease as a safeguard against damage. Think of a security deposit as a measure of protection. Your landlord holds onto the cash to pay for repairs if you damage the property.
Local laws change how security deposits work in different cities and states. For example, security deposits may accrue interest in some places. In other places, the government may limit the amount that a landlord can request.
A renter gives a landlord the deposit before moving in. The amount usually matches one or two months of rent but may vary. The landlord holds onto the money throughout the lease. At the end, the landlord either returns the money or uses it to pay for repairs.
For example, if a tenant breaks a window, the landlord can use the security deposit to replace it. Whenever a landlord uses money from a security deposit, the tenant should receive an itemized receipt. If you do not receive a receipt, reach out to your landlord to ask for one.
The amount of a security deposit varies. Typical amounts match one or two months of rent. Some landlords may request a deposit in addition to advance rent for the first and last month of a lease. Whatever the amount, the details should be clearly listed in your lease.
Landlords typically consider five key factors when determining the amount of a security deposit:
- Local laws
- The cost of one month of rent
- The type and quality of the property
- The amounts used by similar properties
- The lease application of the renter
It’s important to leave a property in the same condition as when you moved in. Otherwise, you may not get back your full security deposit. To help you receive a full refund, thoroughly clean all rooms, keep furniture and appliances in good condition, and professionally repair any damage you cause.
At the end of your lease, your landlord may request a move-out inspection. Be sure to attend the move-out inspection in person. Attending in person allows you to speak about pre-existing damage that you did not cause.
It’s a good idea to document any pre-existing damage when you first move in. One easy way to do this is by taking pictures. Thoroughly inspect all parts of your new residence. When you find pre-existing damage, take a picture. Share a copy of the pictures with your landlord before moving in and retain copies for your records when you move out. You can use the pictures as a reference for what damage existed before you moved in during your move-out inspection.
Landlords collect security deposits to safeguard against property damage. The funds incentivize tenants against damaging a property they rent. The security deposit can also protect a landlord from theft. For example, if a tenant steals any furnishings, appliances, or decorations rented with the lease.
Some states allow landlords to apply security deposits as rent when tenants cannot otherwise pay. Local laws specify when and how a landlord can use a security deposit. In some cases, the landlord may even use the money to cover the final lease payment for convenience.
Be sure you know exactly how much you will owe before you sign a lease. Security deposits and upfront move-in costs can cost thousands of dollars. Some tenants may prefer to find apartments or homes with more flexible payment options, like Safely Finance.
Safely Finance turns upfront moving costs into monthly payments. With Safely Finance, you can move today and pay over time. Signing a lease should be a moment of celebration, not financial stress. Safely Finance gives you options.