Security Deposits: Everything You Need to Know

A security deposit is a payment made by a new tenant to a landlord upon signing a lease. It is typically refundable at the end of the lease, as long as the apartment is kept in good condition.

The “security” part of security deposit refers to a protection for the landlord or owner of the rental unit. If there’s damage to the property, the owner can use the security deposit to pay for any and all damage the renter might have caused.

The “deposit” part of security deposit means that the security deposit money, while you are living in the rental unit, belongs to no one. It’s in a state of escrow. The landlord or owner holds the deposit until you move out. If the rental unit is in the same condition at move-out as it was at move-in (minus normal wear and tear—more on that later), you should get your security deposit back.

Security Deposit Cost

The security deposit is usually equal to one month’s rent. But some landlords charge more. In some states, landlords can charge however much they like for a security deposit, and other states have laws on the books about how much landlords are allowed to charge. For example, in Georgia, landlords can charge whatever they want for the security deposit, but in California, landlords can charge no more than two months’ rent for an unfurnished unit and no more than three months’ rent for a furnished unit.

To be sure, you can check the relevant security deposit laws in your state to make sure your potential landlord isn’t overcharging you.

Don’t worry too much if you’re in a state that has no limits on what landlords can charge. Just because they can charge more, doesn’t mean they will. In a free market, there isn’t a lot of room for landlords to charge exorbitant fees on security deposits.

Normal Wear and Tear vs Property Damage

The security deposit covers any damage a tenant causes to the unit beyond what is called “normal wear and tear.” For example, faded paint would be normal wear and tear, but crayon markings all over the walls would be considered damage.

It’s typically better for you to fix damage you caused or hire someone to fix it. If you leave the damage for the landlord to fix, it might cost you more than what you would have paid doing it yourself. Note that if you do decide to fix the damage yourself, and you don’t fix it properly, the landlord can still hire someone to do the job right and still take the money from your security deposit.

Tenants do not need to pay for normal wear and tear, but they do need to pay if they damage the unit beyond normal wear and tear. This can often be a gray area, but generally, if you break or damage something, you either need to fix it or pay someone to fix it. If not, and the landlord needs to take care of damage you caused, expect the money to come from your security deposit.

The reason renters don’t pay for normal wear and tear is that this is the landlord’s property, and whenever anyone lives in a property, including property owners themselves, there will be wear and tear. Therefore, normal wear and tear is a landlord expense. Otherwise, landlords could try to remodel their rental unit using the tenant’s security deposit money, which is not the intended use of the security deposit.

Getting Your Security Deposit Back

The landlord needs to return your security deposit in a timely manner based on the law for your state. This is typically within 30 days of the lease end date, but you should check your state’s law to know for sure.

If the landlord intends to keep all or part of your security deposit, they typically need to send you a written explanation of why they are doing so, along with an itemized list of the damages and the cost of repairs.

If you caused so much damage that you exceeded the security deposit, you might receive a demand letter from the landlord requesting the extra amount it will cost to fix the damage you caused.

When it comes to getting back your security deposit, it isn’t necessarily an all-or-nothing proposition. It’s also possible to get only part of your deposit back or even to owe additional money. Here’s how the four options work.

Getting it all back

If you return the rental unit in the same condition it was in when you moved in, you should be entitled to get all your security deposit back.

Getting some back

If you damaged the unit and did not fix it, expect the landlord to deduct the cost to repair whatever it was you damaged. You should get a receipt or an estimate of the repair cost when you receive your partial security deposit back.

Getting none back

If you damaged the property to the extent that it will take the entire security deposit (or more) to make the repairs, you probably won’t get your security deposit back. You should, as with a partial return of your deposit, get a receipt or an estimate for the cost of repairs.

Owing the landlord money

If the damage you caused exceeds your security deposit, you can expect to get a letter letting you know how much you owe the landlord, and then you need to send your landlord the money requested. If you don’t pay this money, you could be sued. Again, with this option, the landlord needs to show you a receipt for the work done or an estimate for how much it will cost to bring the place back to its move-in condition.

For more information, see our full guide on how to get your security deposit back.

To Be Certain, Ask for a Walk Through

Because the landlord is holding your security deposit, and you need to wait, usually up to a month, before you get your money back, you might want some reassurance that you will get your money. A good way of doing this is to ask your landlord to do a walk-through with you before you move out. That way, the landlord can inspect the property with you and can let you know of any problem areas that need fixing.

Landlords, however, are typically not obligated to walk through the property with you. And even if they do, after you move out, if they walk through the property again without you and find damage that was missed on the walk through with you (a scratch on the hardwood floor that was hidden under a throw rug, perhaps), they can generally still charge you for that.

Property Damage Caused by Guests

If you have people over and one of your guests causes damage, you would be responsible. The landlord does not need to go after your guest to pay for the damage. The landlord can take the money from your security deposit to get the repairs done. If you want to try to get the money from your guest, you can, but that would be up to you.

What if You Don’t Get Your Security Deposit Back?

If you do return the property in good condition, and your landlord doesn’t return your security deposit, ask, in writing, for it back. You might want to first send a text or email asking for your security deposit. This is where knowing the security deposit laws for your state comes in.

You can let your landlord know that based on your state’s laws, your landlord needs to return the security deposit in X number of days after move-out or provide a written account as to why they are withholding all or part of the money. 

If that doesn’t work, try sending a demand letter through certified mail. You can say the same thing as you did in text or email, but sending a formal demand letter usually carries more weight and oftentimes causes the landlord to finally act. If you don’t get your money or an explanation as to why your landlord is withholding your security deposit, you might need to take your landlord to small claims court.

For more information, see our full article on how to get your security deposit back.

Can You Use the Security Deposit for Rent?

There’s a term called “living out the last month.” It means not paying rent the last month of your tenancy and just letting the landlord keep the security deposit in lieu of you paying rent that last month. That practice is usually not allowed because it defeats the purpose of the landlord having a security deposit in the first place.

The exception is if you ask the landlord if you can do this and the landlord agrees to it. If you’ve been a responsible tenant, your landlord might let you use your security deposit to pay for last month’s rent. Expect your landlord to conduct a walk-through to ensure there is no damage before agreeing to this.

If you cause damage during that last month and after the walk though, expect to get a demand letter asking you to pay for any damages that either happened after the walk-through or any damages the landlord might have missed during the walk-through. If you did cause some damage, it’s best to be upfront about it instead of trying to hide it. When you move out, the landlord most likely will discover the damage anyway. And then, not only will the landlord probably ask you to pay for it, the landlord might not give you a good recommendation when you want to rent your next place.

The Bottom Line

The security deposit belongs to you, but you could lose all or part of it if you damage the property. If you want your full security deposit back at move-out time, be respectful of the rental unit. Even though it’s not your property, you do have money on the line. It’s a win-win for everyone if you treat your rental property as if you owned it.