State Regulations
Security deposit laws vary significantly by state. Key areas regulated:| Regulation | Common Range |
|---|---|
| Maximum deposit | 1-3 months’ rent (some states no limit) |
| Holding requirements | Separate account, sometimes interest-bearing |
| Return deadline | 14-45 days after move-out |
| Itemization required | Most states require written list of deductions |
| Penalties for violations | 1-3x deposit amount plus attorney fees |
Check your state’s specific requirements. Violations—even technical ones—can result in forfeiting the right to deduct or penalties exceeding the deposit amount.
Collecting Deposits
Amount Limits
Amount Limits
Many states cap deposits at 1-2 months’ rent. Some allow more for furnished units, pets, or high-risk tenants. Some states have no limit.Pet deposits may be separate or included in the cap depending on state.
Non-Refundable Fees
Non-Refundable Fees
Some states allow non-refundable fees (cleaning, pets). Others prohibit them or require specific labeling.If labeled “deposit,” it’s typically refundable regardless of what the lease says.
Timing
Timing
Typically collected before or at move-in. Some states require receipt showing amount, date, and holding location.
Holding Requirements
Separate Accounts
Separate Accounts
Many states require deposits held in separate bank accounts, not commingled with landlord’s personal funds.Some require specific account types or institutions.
Interest
Interest
Some states require interest-bearing accounts with interest paid to tenants annually or at move-out.Rates and payment timing vary by jurisdiction.
Disclosure
Disclosure
Some states require landlords to disclose bank name, address, and account number to tenants.
Allowable Deductions
Landlords can typically deduct for:- Unpaid rent (including final month)
- Damage beyond normal wear and tear
- Cleaning (if unit not left reasonably clean)
- Unreturned keys or access devices
- Other lease-specified charges (if legal in the state)
Normal Wear vs. Damage
Normal Wear vs. Damage
Normal wear (not deductible):
- Faded paint from sunlight
- Worn carpet in traffic areas
- Minor scuffs on walls
- Loose door handles from normal use
- Holes in walls
- Stained or burned carpet
- Broken windows or fixtures
- Pet damage
- Excessive filth requiring professional cleaning
Depreciation
Depreciation
Deductions should account for item age and useful life. Cannot charge full replacement cost for old items.Example: 8-year-old carpet with 10-year life expectancy damaged. Tenant owes 20% of replacement cost, not 100%.
Return Process
1
Move-out inspection
Many states give tenants the right to be present. Document condition with photos and written notes.
2
Calculate deductions
Itemize each deduction with specific amounts. Keep receipts or estimates for repairs.
3
Prepare itemized statement
Written list of all deductions with amounts. Required in most states even if no deductions taken.
4
Return within deadline
Mail or deliver remaining deposit plus itemization within state-required timeframe (typically 14-30 days).
Move-In/Move-Out Documentation
Proper documentation protects both parties. Move-in:- Complete written checklist of property condition
- Photograph or video all rooms
- Note any existing damage
- Both parties sign and date
- Each party keeps a copy
- Walk through using same checklist
- Compare to move-in condition
- Photograph any damage
- Tenant can attend in most states
- Document thoroughly before any cleaning or repairs
Disputes
Common dispute causes:- Disagreement over what constitutes “damage”
- Deductions for pre-existing conditions
- Failure to return within deadline
- Missing or incomplete itemization
- Deductions exceeding actual repair costs
- Direct negotiation
- Demand letter citing specific law violations
- Small claims court (designed for these disputes)
- Local tenant rights organizations (may mediate)
- Filing fees typically $30 - $100
- No attorney required
- Tenant can sue for deposit plus statutory penalties
- Landlord can countersue for damages exceeding deposit