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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 law firm in your state.
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 4 hours after your membership is approved and after initial contact. Your provider lawyer will be able to tell you exactly how to handle security deposits for your rental unit.
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.