• Security depositsnewbury apartment building image by Stephen Orsillo from Fotolia.com
  
  A security deposit is a deposit that a tenant gives a landlord, usually at the time of moving in to a property. This deposit may cover other things, such as the last month's rent, a pet deposit or a key deposit. The law on the landlord-tenant relationship varies from state to state. Local governments, usually cities, sometimes have their own landlord-tenant laws that are stricter than state laws. Every landlord and tenant should know the laws of both the state and the local jurisdiction where rental property is located.
  
  

The Nature of the Deposit

• The law in a majority of states sets a limit on the amount a landlord can charge for a security deposit. For example, the landlord may only be able to charge an amount equal to one or two months rent as a deposit. The landlord is usually required to give the tenant a receipt for the deposit received. In some states the landlord can raise the deposit if the rent is raised, but other states do not allow that. A deposit that is called prepaid rent or the last month's rent in writing is not a security deposit in some states, and the tenant can use it as the payment of the rent for the last month of the tenancy.
  
  

Holding the Deposit

• Some laws require a landlord to keep the money paid into a security deposit separate from her own money. In other places, the landlord can spend or commingle the money with her own money as long as the money is available to be paid back to the tenant at the end of the tenancy. In some jurisdictions, the landlord has to put the money from the security deposit into an interest-bearing account and keep it there during the tenancy. This may be required by local law even if the state does not require it. For example, the cities of San Francisco and Berkeley require landlords to keep security deposits in interest-bearing accounts, though California law does not require that.
  
  

Returning the Deposit

• Some states allow a landlord to charge nonrefundable deposits, such as cleaning deposits, which are really fees and not deposits. Other states allow only refundable deposits where the landlord must refund the deposit at the end of the tenancy unless there is a justification for keeping it. A landlord in most states is required to bear the costs of wear and tear on a property as part of the cost of doing business. Landlords can keep deposits only to cover damage caused by the tenant beyond ordinary wear and tear or to pay for cleaning the tenant failed to do.
  
  

Resolving Disputes

• Each state has its own procedures for resolving disputes about security deposits. In many states the landlord has to itemize the reasons for keeping a deposit in writing and give it to the tenant within a certain time after the tenant leaves the property. Sometimes the tenant has to leave a forwarding address before the landlord is required to give this notice. If disputes cannot be resolved the tenant must go to small claims court to recover the deposit in many states. If the landlord has not complied with the proper procedures he or she may have to refund all the deposit, even if there was damage to the property. Some states have penalties for unjustified failures to return security deposits.