What Is a Security Deposit for Rent?

A security deposit for rent is a sum of money that a renter pays their landlord before moving in. It is intended to provide financial compensation to the landlord in the event of unpaid rent or damage to the property beyond normal wear and tear.^[1]

In this article, we’ll discuss what a rental security deposit is for, how much you might have to pay, and what might cause you to lose your deposit.

What is your security deposit used for?

When you sign a lease agreement on a rental property, you’ll pay a security deposit to your landlord or a property manager, who will hold it for the duration of your lease. The purpose of a security deposit is to protect the property owner against any damage to their property.

If the property is excessively damaged or dirty, your security deposit, or a portion of it, may be used to clean and repair it to its original condition. As a tenant, you are not responsible for any damage caused by normal wear and tear and the landlord is responsible for carrying out all repairs to the unit.^{[1] [2]}

Can your security deposit be used for unpaid rent?

Yes, a security deposit can be used to cover a shortfall if a tenant fails to pay rent. It can also be used to cover unpaid utility bills if these are paid through the landlord. This helps the landlord make sure they are not left with unpaid bills when a tenant leaves the rental property.

A landlord can also use your security deposit if you terminate your lease early unless the lease agreement specifically states otherwise. In these situations, the landlord could use the security deposit to cover the costs of lost rent or finding a new tenant.^[3]

What can your security deposit not be used for?

There are a number of things that a landlord should not use a security deposit for. These restrictions are in place to protect tenants from unfair landlord practices.

Things your security deposit should not be used for include:

• Last month’s rent - Unless there is a specific written agreement, a security deposit should not be used to pay the last month’s rent.
• Normal wear and tear - Landlords cannot use a security deposit to pay for routine cleaning and maintenance or repairs to damages that result from normal wear and tear, for example, worn carpets or small scuffs on the walls.
• Costs unrelated to the tenant - A security deposit can’t be used to cover damages or other costs that are not a direct result of the tenant’s behavior or occupancy.^[3]

How much is a rent security deposit?

The amount you have to pay for a security deposit on a rental property can vary depending on the price of the rent itself, the state you live in, and other variables like whether the property is furnished or whether you have a pet.^[1]

Generally, the security deposit will be equivalent to one month’s rent, so if your monthly rent is $1,000, your security deposit would also be $1,000. Some landlords might ask for two months’ rent as a security deposit, meaning you’d need to pay $2,000 if the monthly rent cost was $1,000.

Your credit score can also impact how much you need to pay your landlord as a security deposit. Some landlords might ask for a higher security deposit if you have a low credit score unless you have a co-signer. Even in this case, the landlord still has to adhere to any state maximum limits for security deposits.^[2]

If you’re renting and you need to build credit, a rent reporting service can help by reporting your rent payments to the credit bureaus, meaning they can be factored into your credit report.

State limits on rental security deposits

More than half of states in the U.S. set limits on how much landlords can charge you for a security deposit. However, some states have no statutory limit meaning there is no cap on the amount a landlord can charge for a security deposit.

For example, in New York, landlords can collect a maximum of one month’s rent for units except those that are subject to the City Rent and Rehabilitation Law or the Emergency Housing Rent Control Law. In Colorado, the limit is two months’ rent, but a landlord can request a refundable deposit of up to $300 if the tenant has a pet.

According to Nolo, 21 states have no statutory limit on the amount a landlord can charge for a security deposit. These states are:

• Florida
• Georgia
• Idaho
• Illinois
• Indiana
• Kentucky
• Louisiana
• Minnesota
• Mississippi
• Montana
• Ohio
• Oklahoma
• Oregon
• South Carolina
• Tennessee
• Texas
• Utah
• Vermont
• West Virginia
• Wisconsin
• Wyoming

When looking for information about rent security deposits in your state, it’s important to do your own research. Many state legislatures have a detailed list of statutes on their websites; be sure to review the most recent information as statutes and rules can change often.^[4]

When do I pay my security deposit?

Typically, your landlord will require you to pay your security deposit before the start of the lease period. In many states, the landlord is required to deposit this money into an interest-bearing bank account, and you as the tenant should get any interest generated during the lease term.

As a tenant, it’s a good idea to get a written receipt for your security deposit including the amount paid, the date of payment, the names of the parties involved, and the landlord or property manager’s signature.^[5]

Do I get my security deposit back?

In most states, it is legally required for a landlord to refund your security deposit once the tenant moves out. Typically, around two to three weeks after you leave the apartment, you’ll receive a statement from your landlord including a list of expenses such as any cleaning or repairs that were required. These costs will be deducted from your security deposit and you will get the remaining deposit back, plus any interest earned.^[1]

Landlords are given a set amount of time (typically between 14 and 30 days) in most states to return your full security deposit or provide you with a written statement of itemized deductions and a refund of the rest. For a tenant, the return of the security deposit is quite a standard process, but each state has its own deposit return timelines, so make yourself aware of this before the end of your rental agreement.^{[6] [7]}

Ensuring you get your security deposit back

A good way to make sure your security deposit is returned to you is to inspect the apartment when you move in and make a list of all of the items and any pre-existing defects or damages, including photos if possible. Share this list with your landlord, and make them aware of which items or areas were already damaged before your lease began. This should help prevent any disagreements over damage or missing items when your lease ends.

Once you come to the end of your rental agreement, refer back to your list and photos and check the condition of the items and the space. This will help your landlord determine whether your security deposit needs to be used for repairs, and help you avoid paying for damage you didn’t cause. You can also ask for a walk-through before you leave, allowing your landlord the chance to point out any issues that might need to be addressed.^[7]

If your landlord doesn’t return your security deposit in the time outlined in your state’s laws, you could consider legal action. If you have given notice of the end of your lease, paid your rent on time, and left the property in good condition, try to come to an agreement with your landlord and put this in writing.

If you can’t come to an agreement, you can send a formal letter including facts that state why you are owed the money back and citations to the relevant state security deposit laws. If that doesn’t work, the next step would be to consider filing a lawsuit in small claims court against your landlord. If you win your case, the court might award you court costs and attorney’s fees as well as the return of your security deposit.^{[1] [7]}

What happens if I break my lease?

If you break your lease early, your landlord may have the right to keep your security deposit. Many state laws state that if a tenant breaks a lease, they forfeit their security deposit, as outlined in the lease agreement. In these circumstances, the landlord has the right to keep all or part of the security deposit to cover any remaining rent or damages beyond normal wear and tear. ^[3]

Does your security deposit increase with a rent increase?

Your security deposit can be increased when your lease is renewed or if your landlord gives you enough notice (usually 30 days), but it depends on the terms of your lease.

Fixed-term leases

If you have a fixed-term lease, your landlord is not permitted to increase the security deposit during your lease unless the lease specifically allows it, but this is rare. Be sure to read your lease agreement carefully before you sign and make sure you understand your rights and what your landlord is and isn’t permitted to do during your lease.

Month-to-month leases

With a month-to-month lease, your landlord can increase your security deposit in the same way they can increase your rent cost. They have to give you written notice 30 days in advance of this change. Some states stipulate a maximum security deposit amount that you can pay, and your landlord can’t ask you to pay more than that amount.^[6]

The difference between the first and last month’s rent and a security deposit

Many landlords will ask you to pay the first and last month’s rent upfront when you sign a lease agreement. They can usually collect the last month’s rent upfront in addition to or instead of a security deposit. Landlords might ask you to pay the last month’s rent upfront to financially protect themselves against renters who might try to avoid paying for the final month of their tenancy. This can benefit tenants as well as it can reduce the financial burden when the time comes to move to a new location.

In many states, the last month’s rent is included as part of the overall security deposit, and this limits the total amount a landlord can collect as a security deposit. For example, in California, a landlord cannot charge more than two months’ rent for a security deposit for an empty residential apartment, but they can charge up to three times the monthly rent for a furnished apartment. For an unfurnished apartment, this means they can charge two months’ rent for a typical security deposit, or they can collect the last month’s rent and one month’s rent for the security deposit. The total amount cannot exceed two months’ rent.

Be sure to check the security deposit laws in your state to ensure your landlord is not asking for more money upfront than they are allowed to.^[7]

You can visit resources like Rocket Lawyer and Nolo to see state-by-state security deposit laws. According to Nolo, most states set limits on the amount landlords can charge for security deposits, although some have no statutory limit, meaning there is no cap on the amount landlords can charge. State laws are often quite specific with regard to deadlines for returning security deposits. Search online for your state’s statutes and be sure to review the most recent information and the local rent control or rent regulation rules for security deposit limits.^[4]

Sources

1. Justia, “Security Deposit Rules and Tenants’ Legal Rights” https://www.justia.com/real-estate/landlord-tenant/information-for-tenants/security-deposits/.
2. Rent.com, “What is a Security Deposit?” https://www.rent.com/blog/what-is-a-security-deposit/.
3. Azibo, “Using Security Deposit as Rent - Is it Allowed?” https://www.azibo.com/blog/can-security-deposit-be-used-for-rent.
4. NOLO, “State Laws on Security Deposit Limits” https://www.nolo.com/legal-encyclopedia/chart-security-deposit-limits-state-29020.html.
5. Find Law, “Rent and Security Deposit Laws” https://www.findlaw.com/realestate/landlord-tenant-law/rent-security-deposits.html.
6. NOLO, “Security Deposit Limits and Uses” https://www.nolo.com/legal-encyclopedia/free-books/renters-rights-book/chapter4-2.html.
7. Find Law, “The Difference Between Last Month’s Rent and a Security Deposit” https://www.findlaw.com/realestate/landlord-tenant-law/the-difference-between-last-month-s-rent-and-a-security-deposit.html.

About the author

Becca has over 10 years of experience as a content writer, working across various industries including finance, digital marketing, education, travel, and technology. Her work has been featured in publications including Forbes, Business Insider, AOL, Yahoo, GOBankingRates, and more.

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