What is a Security Deposit?
A security deposit is a lump sum given to a landlord that confirms the tenant’s intent to rent the apartment and care for the unit. It will typically be required at the lease signing before you can move in and serves as a financial commitment that the tenant will take care of the unit to the best of their ability and follow all the rules outlined in the lease.
The security deposit is refundable and will be returned to the tenant at the end of the lease term if they follow the rules. But the landlord has the right to keep the security deposit to cover any damages to the unit or as compensation for other lease violations.
How Much Is a Security Deposit When Renting?
Typically, the security deposit will be equal to one month’s rent. However, it’s up to the discretion of the landlord. The landlord may sometimes request a larger security deposit if the tenant carries additional risk. For instance, if you have a pet or your income fluctuates, the landlord may want to ask for a larger security deposit to feel comfortable taking you on as a tenant. Some states limit how much a landlord can charge for a security deposit – for example, in New York, it’s limited to one month’s rent. But there is no limit in other states like Florida, Illinois, and Colorado.
When Do I Pay My Security Deposit?
The security deposit is usually due at lease signing or before you move in. Unless you have a personal relationship with the landlord, they likely will not let you move in until you give them a security deposit.
Otherwise, they have no way to cover the loss if you damage the apartment. However, they can’t spend the money either. The security deposit will be kept in an escrow account until the end of the lease term. The deposit is typically required to be paid in cash or as a certified check, so the funds are liquid.
Will I Get My Security Deposit Back?
Yes, you will get your security deposit back if you obey the rules of the lease and don’t damage the apartment excessively. The lease will allow for normal wear and tear, which means the routine deterioration a unit goes through due to aging.
However, if you do significant damage to the apartment or display some prohibited behavior that impacts the condition of the unit (such as smoking or keeping an unauthorized pet), the landlord may keep a portion or all of your security deposit to pay for repairs.
If they do so, they must tell you in writing and provide a detailed description of the damage, along with proof of any lease violation. But you also have the right to challenge them in court if you feel they’re being unreasonable.
Why Do Landlords Collect Security Deposits?
The landlord is taking a considerable risk by allowing a stranger to live in their property. So, they will want some financial commitment from tenants that they will not destroy the property.
For instance, if the landlord did not collect a security deposit but returned to the unit to find the refrigerator missing, they’d have little recourse. Of course, they could sue the tenant or even file criminal charges, but that could be costly and time-consuming and may be more trouble than it’s worth.
So, most landlords require a security deposit to protect their investment and hold tenants accountable for their actions.
Are There Alternatives to Security Deposits?
Yes, there are alternatives to the security deposit. However, they aren’t accepted by all landlords. One example is lease insurance, which is available through a 3rd party insurer who charges the tenant a monthly payment in exchange for insuring any damage to the apartment.
Another option is a surety bond, which requires a smaller upfront payment to a 3rd party bond issuer and a small monthly fee that protects the tenant from damages. So, these may be viable options if you want to avoid paying a large lump sum of cash up front, but you should check with the landlord to be sure they’ll accept one of these alternatives.
Rent Security Deposit Bottom Line
A security deposit is a common moving expense required by most landlords. So, if you are planning on moving into an apartment soon, you should be sure to save for this additional cost. However, don’t consider it a total loss, as you’ll get your money back if you follow the rules.