Urban Dwelling

Most people I know, including myself, aren’t that crazy about moving. You spend a good amount of time looking at spaces, choosing the place you want, being approved and coming up with enough money up front to make it yours. A good portion of this up-front money is, of course, your security deposit – the dollar figure handed over to your landlord as assurance that you will leave your space the way you found it. But what do you really know about the security deposit once it leaves your hands? Where does it go and what happens to it?

The Basics of Security Deposits

1)    A typical security deposit is equal to one month’s rent but there are times that landlords will require more. Sometimes, due to such things as credit concerns or pets, the landlord will want to withhold extra. However, the most a landlord can keep as security during the first year of a lease is two months’ rent. And after the first year, the amount cannot exceed one month’s rent; the remainder is required to be returned to the renter.

2)    For a security deposit over $100, the landlord is required to keep the deposit in a separate, interest-bearing escrow account. Interest accrued belongs to the tenant, however the landlord is allowed to keep some or all of this interest; depending on the amount of interest that is accrued. If your security deposit accrues more than $10 of interest in a year, the IRS may consider it to be taxable income.

3)    Once the lease ends and the tenant moves out, the landlord has 30 days to return the security deposit, minus any deductions for damages. If money is deducted for damages, the landlord must also provide a list of these damages to the tenant, also within 30 days. It is extremely important for a tenant to provide the landlord with their new mailing address.

What can I do to make sure I get my full security deposit back?

1)    On the day you receive the keys, point out to the landlord any items about the rental space for which you think may be deducted from your security deposit when you leave. List any deficiencies and have the landlord sign the list.

2)    When you move out, make sure you clean the space thoroughly. If you do not fully clean the apartment, the landlord may charge you for this expense. Also, make sure that you do not leave any items in the space when you leave. The landlord can charge you clean-out fees for any items left behind. If it is in your lease to professionally clean carpets, make sure you do so and give a copy of the receipt to your landlord.

3)    If there are any damages that occur during your tenancy that you think the landlord may charge you for, communicate with the landlord in advance and determine if they are things for which you will be responsible. After all, if it is an item that you will need to address, it may be cheaper and easier for you to do the repair instead of the landlord.

Sam Gorgone, Hometown Property Management Services, LLC