What is a security deposit?

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Question:

What is a security deposit?

Answer:

A security deposit is a sum of money that landlords require tenants to pay before they move in; the purpose is to have a financial backup if a tenant fails to pay rent or damages the rental property. Most states set a dollar limit, such as one or two months’ rent, on how much a landlord can collect as a deposit. States typically require landlords to return the deposit by a specified deadline after a tenant moves out, along with an itemization of deposit deductions for unpaid rent or the cost of repairing damages to the rental unit. A tenant may not use a security deposit as last month’s rent, unless the landlord agrees or the lease or rental agreement states that the deposit may be used this way. Finally, a deposit is typically refundable; in fact, some states, such as California, specifically prohibit landlords from charging nonrefundable fees, while others, including Arizona, allow certain types of nonrefundable fees, such as for cleaning or pets.

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