SECURITY DEPOSIT

Landlords: How to Use Security Deposits to Protect Your Property

State and local laws dictate how much of a security deposit landlords can require, under what circumstances they can use the tenant’s deposit funds and a variety of other rules and regulations landlords must follow. 

Study this page to make sure you’re handling deposits according to local law. Should you need additional legal advice, join LegalShield to get unlimited access to a law firm in your state. 

man and woman packing house

The Security Deposit Laws Landlords Must Follow

While the lease may come in to play, ultimately, security deposits are governed by state and local laws. Since the rules vary from state to state, it's critical that you know the laws in the state in which your rental property is located. 

Let’s review the most common scenarios and questions we receive from Landlords. 

The Maximum Security Deposit a Landlord Can Require

How much of a security deposit can landlords require in the first place? Once again, the answer depends upon the state in which the rental unit is located. Here are a few examples. 

  • Some states limit security deposits to an amount equal to one month’s rent.
  • California limits deposits to two month’s rent, unless the rental is furnished, in which case the deposit can be up to three months.
  • Some states have no limit on the amount of a security deposit a landlord can request.
  • Cities and counties might have different security deposit laws you need to check, especially if the unit is rent controlled.

If this is your first rental or you are unsure about the laws in your state, it’s a good idea to get legal advice to protect your real estate investments. When you join LegalShield, you can be on the phone with an experienced landlord lawyer within four hours after your membership is approved. Your provider lawyer will be able to tell you exactly how to handle security deposits for your rental unit.

couple carrying boxes down the stairs
Understanding the Timeframe Your Landlord Has to Return a Security Deposit

Legally Permitted Uses of a Tenant’s Security Deposit

You collected a security deposit to protect your investment against damage, missed rent and other common tenant issues. But when are you allowed to actually use all or a portion of a tenant’s security deposit? Here are some general rules. 

  • To return the unit to its original condition at the end of a lease term (not upgrade or improve the unit).
  • To repair property damage caused by a tenant (this does not include normal wear and tear).
  • To clean the property if it’s excessively dirty when turned back over to you.
  • To pay for removal of property left by the tenant.
  • To make up unpaid rent.

Most states require Landlords to send a letter to the tenant notifying them of their intent to use their security deposit funds and to provide an itemized list of deductions and receipts for any repairs they claim to have made. If notification does not satisfy local law, landlords may forfeit their right to use the funds on deposit. Also, the landlord may be required to conduct a walk through with the tenant(s) to point out their reasons for withholding all or a portion of the security deposit and give the tenant a chance to dispute their claims and/or time to make necessary repairs. 

When Landlords are Required to Pay Tenants Interest Earned on a Security Deposit

In almost all states, landlords are required to keep security deposits in a separate bank account. Some states, such as Florida and Connecticut, require landlords to pay any interest earned on security deposits back to the tenant. Payments may be due at the end of the rental term or annually if the lease has a multiyear term. Other states allow landlords or property managers to keep any interest earned. 

In order to determine the situation in your state, you can conduct internet research. Alternatively, you can purchase LegalShield’s most popular small business plan for $49 per month and a lawyer in your state can answer all of your questions regarding security deposits, your lease in general or any other area of business law. 

a person counting money

How LegalShield Works

Finding solutions to your legal issues doesn’t have to be stressful, complicated or expensive.

LegalShield puts the power of legal representation within reach of any individual, family or business. We work hard to make it easy, simple and affordable to get the legal help you need, when you need it.

See What Our Customers Say

  • The lawyer who spoke with me was extremely helpful. She answered all my questions, made sure I knew where to complete the Will forms online, and called me to confirm information to complete our forms. The completed Will, Power of Attorney, and Directive to Physicians were completed and back to us within a week. We were pleased and would highly recommend your services.
    Sharon H.
    Texas Member
    The lawyer who spoke with me was extremely helpful. She answered all my que..
    Read More
    I have had an above and beyond experience each time I've reached out to the support team. I ask questions and I get great feed back and informative information that has helped me with my situation that I would not have know if it wasn't for the attorney informing me of my rights. Thank you and keep doing a wonderful job.
    Renita L.
    Missouri Member
    I have had an above and beyond experience each time I've reached out to the..
    Read More
    They called me back before the allotted time frame and looked over the documentation quickly as well. I have been able to handle what I needed to on my end because they have been so thorough.
    Ayana
    Ohio Member
    They called me back before the allotted time frame and looked over the docu..
    Read More
Get Legal Support to Resolve Security Deposit Disputes
LegalShield offers the most affordable way to have a lawyer on your side.

Plan

Price