Security Deposit

A security deposit is a payment collected from a tenant at the start of a tenancy. The landlord holds it in trust and returns it — minus any allowable deductions — after the tenant moves out.

What it covers

You can typically deduct from a security deposit for:

• Unpaid rent
• Damage beyond normal wear and tear
• Cleaning costs if the unit is left in worse condition than it was rented

You cannot deduct for normal wear and tear — things like minor scuffs, small nail holes from pictures, or carpet that aged with normal use.

State limits and rules

Most states cap security deposits at 1–2 months’ rent. They also set rules on:

• Where the deposit must be held (often a separate escrow account)
• How long you have to return it after move-out (typically 14–30 days)
• What documentation you must provide with any deductions

Always check your state’s specific landlord-tenant law.

Best practices

• Document the unit’s condition with photos and a signed move-in checklist before the tenant moves in
• Keep the deposit in a dedicated account, separate from your personal funds
• Return the deposit promptly and with an itemized statement of any deductions