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Better Understanding Security Deposits

security depositsSecurity deposits are money deposits to your landlord to help ensure your rent is going to be paid and other key responsibilities outlined in the lease are going to be performed as well. Laws about security deposits are going to vary from one state to the next. However, the information below will provide you with a general overview of security deposits.

Last Month’s Rent or a Security Deposit?

While many people think that they are the same thing, they aren’t. Essentially, the last month’s rent payment is only a pre-payment to your landlord for your last month at the property. The security deposit is often just a month’s rent. Depending on where you live, there are states where a landlord can charge more than one month’s rent for the security deposit. Tenants aren’t able to use their security deposit as their last month’s rent and landlords cannot use a last month’s rent for security deposit.

Security Deposits: Interest and Receipts

When you give your landlord the security deposit or last month’s rent payment, you should be given a receipt for both of those payments. If you don’t get one, you need to ask them for one. In many of the states, landlords are required to provide you with one. Make sure the receipt contains the following information:

1.    Amount paid
2.    Date payment was received
3.    Intended purpose of the payment
4.    Name of the individual receiving it
5.    If using an agent, the landlord’s name that rent is being collected for
6.    The landlord or agents signature

If they are collecting the last month’s rent, your landlord should provide you with a statement that outlines whether interest is going to be paid or not. When the tenant moves out, they need to provide their landlord with a forwarding address for their deposit to be sent. You need to be in agreement on the condition of the property. List any damages upon your moving in so that the landlord doesn’t try to make you pay for them later on down the road. Photograph any existing damage to make sure you are on the same page.

Returning the Security Deposit

Landlords only have so much time to return the security deposit to you after the tenancy has been terminated. Landlords are able to deduct rent that you didn’t pay them, as well as any reasonable amount needed to repair damages you caused. Damage from your pets can also be deducted. You aren’t going to be made for normal wear and tear to the property though. If there is damage to the property, you are entitled to receive a detailed list of where the money was spent on repairs and any bills, estimates, invoices, receipts and bills that indicates what the actual cost is going to be to repair damages you caused.

The landlord cannot simply hold onto your money and not return it. They can be forced to pay interest if they don’t follow the rules and regulations of the courts. Make sure to ask about the different rules and regulations pertaining to your security deposit.