When you rent a property, you will be requested to pay a deposit. You may be wondering why it’s necessary to pay a deposit and the first month’s rent when you sign a lease or why a security deposit is so high especially if your rent is under $1000 a month?
If you are renting an apartment, your landlord may request a rental deposit, a security deposit, and utility fees depending on the agreement.
To help you understand the security deposit, we look at the reasons for a deposit, and how much is too much to pay, and what you should know to protect your rights as a renter.
What is a Security Deposit?
When you rent an apartment, the security deposit is the money you pay to the landlord upon signing a lease agreement. The money is kept in a trust or savings account until it is either used by a landlord or returned to the tenant by the end of the lease.
You can ask your future landlord what your security deposit will cost
The purpose of a security deposit is to act as financial protection against property damages, late rent payments, and tenancy problems as indicated in the lease. If you were a landlord, and a tenant rips up the carpets, knocks holes in the walls, and leaves the apartment full of junk, you wouldn’t want to pay for the repairs and maintenance because it takes away from your bottom line and compromises your business.
Landlords require deposits to settle the costs of any damages or fixtures (such as hanging shelves or artwork without permission). This prevents them from having to cover the out-of-pocket expense to restore the interior and prepare it for a new tenant, which costs time and money. Instead, they will use the deposit to cover the expenses.
Let’s take a look at why you have to pay a deposit when you are renting property.
Why Must I Pay a Security Deposit?
Don’t hide away, understand what you’re paying for!
If the landlord requests a deposit and it is stipulated in your lease agreement, then you have to pay a deposit. As previously mentioned, it is financial protection for the landlord against interior damages, but it is also a protection for tenants.
If you pass your end-of-lease inspection, which means keeping the apartment in excellent condition for the duration of renting, then you get your deposit back in full. A security deposit will not hold an apartment for you if you are applying to rent it. That is what a rental deposit is for.
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What is the Difference Between a Security Deposit and a Rental Deposit?
The security deposit is what you pay upon signing a lease and it covers any damages or late rental payments. You keep the apartment in excellent condition, and you get the deposit refunded in full. If the apartment is damaged, the landlord has the right to keep a portion of or the full deposit.
Rental deposits consist of the sum of money paid to a landlord to hold a property or an apartment for you until you can come up with the funds for the deposit, rent, or meet one of the lease requirements. It is usually separate from the lease and prevents the landlord from accepting any other applications until you meet the requirements for the apartment.
How Much Should You Pay for a Security Deposit?
Mot security deposits are equivalent to one month’s rent.
If you receive a notice from the landlord to pay a security deposit and it’s 2 months rent, or one month and extra charges, you may be wondering why you have to pay so much just to take occupancy. When tenants are issued a high-security deposit, it is usually because of some type of risk such as negative credit history.
When you read your lease, you should find the exact amount to be paid into an account provided by the landlord.
Is There a Limit on How Much a Landlord Can Charge for a Security Deposit?
The total amount for the security deposit is governed by state jurisdictions and regulations; however, private landlords can generally charge what they see fit.
It is a good idea to look at similar types of properties to rent in the area and to find out what their security deposit rate is. This will help you determine whether you are paying too much.
If you have a negative credit rating or eviction history, the landlord can charge a higher-than-average deposit. You can also ask the landlord why the amount for the security deposit in the lease is so high. They should provide a valid explanation to help you understand where you’re money is going.
How Do I Know if My Landlord is Withholding My Security Deposit?
Once an apartment end of lease inspection is performed, you should be informed of the status of your refund a few days to a week after you move out. This is why it is so important to keep your landlord updated of your new address. It prevents delays when issuing the refund.
If you are not getting the security deposit refunded by the end of your lease, you will also be notified by the landlord.
Why Wouldn't I Get My Security Deposit Back?
Your landlord has the right to withhold your security deposit if your rent isn’t paid. Late payments are considered a breach of contract and the landlord can keep all or part of the deposit.
Damages include physical damage to the apartment interior such as knocking nails into the walls or staining carpets. It can also involve dirt and trash that are left in the apartment or a dirty apartment when moving out at the end of the lease.
Early Lease Termination
If you end a lease early or get evicted, you will not get your deposit back. In some states where the monthly rent is paid, the landlord must receive a 30-day notice. A breach allows landlords to keep the entire deposit or a portion of it to cover the financial and other losses.
Apart From the Security Deposit, Can the Landlord Increase My Rent During the Lease Period?
No, the lease is your signed contract that describes what you pay and when you will pay the rent. Only if there is a clause stating that rent can be increased during your lease period can the landlord make the change. If this clause does not describe when and by how much rent is raised, the increase must be negotiated with you.
Changes to the lease can only be made if you agree to it, verbally or nonverbally. It is always a good idea to have any changes to the contract in writing.
Once you’re clued up about your security deposit, you can rent with confidence!