Security Deposit

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Security Deposit

Money aside from the payment of rent that a landlord requires a tenant to pay to be kept separately in a fund for use should the tenant cause damage to the premises or otherwise violate terms of the lease.

A security deposit is usually in the amount of one or two months' rent. It usually must be paid at the time that the Landlord and Tenant sign the lease. The landlord must place the funds in an escrow account and give the tenant any interest generated by such funds. Upon the termination of the lease, the landlord must return the security deposit to the tenant if no violations of the lease occurred. He or she may keep the security deposit or portion thereof for the amount of any damages, which can be proven, pursuant to the terms of the lease.


Landlord and Tenant.

security deposit

n. a payment required by a landlord from a tenant to cover the expenses of any repairs of damages to the premises greater than normal "wear and tear." The security deposit must be returned within a short time (varying by states) after the tenant vacates, less the cost of repairing any unusual damage. Unfortunately for tenants these damages are usually subject to the judgment of the landlord, who may desire to paint and refinish on the tenant's money, and is thus, resulting in many small claims suits. In a few states the security deposit must be kept in a separate bank account, and some states require payment of interest on the amount held as a deposit. A security deposit is sometimes confused with a deposit of the "last month's rent," which may be credited to the tenant for the final month's rent. A security deposit cannot be used legally as a rent credit. (See: landlord and tenant, rent, lease)

References in periodicals archive ?
Residents may waive their security deposits by completing a Deposit Saver request form when they fill out their apartment application.
Citing this regulation, the Internal Revenue Service recently charged that security deposits received by several utility companies should have been counted as income when they were received--not later, when the deposits were applied against utility bills.
Further, in some markets, competitive conditions have led owners to the point where they cannot get security deposits at all.
SureDeposit has already saved residents more than $20 million in security deposits nationwide, and we are projecting that we will have 300,000 active units under agreement by year-end 2001.
NHP has refused to refund tenants security deposits that were paid to Lynnewood Gardens prior to the foreclosure action but were not turned over to NHP by the owners of Lynnewood Gardens, Patchen said.
Formerly the Tenant Security Deposit Bond Program, SureDeposit is underwritten by Bankers Insurance Group.
Through a series of tenant negotiations, including many in which the NJTO was directly involved, Hearthstone has been able to substantially replace all of MLG's missing security deposits by either direct payment, a 1-1/2 month rent rebate or a rent credit paid over 18 months.
SureDeposit issues a $175 bond, which replaces the security deposit, but provides owners with more revenue and the same protection as if they had required a month's security of $1,000.
However, with "free rent" commonly exceeding one year and construction allowances routinely exceeding $40 per square foot, it is often impractical for a tenant to tie up so much cash in a conventional security deposit account.
In turn, Evergreen residents will have the option to sign up for the Deposit Saver program and receive an immediate refund of their security deposit, which average over $500.
Tenants generally deplore posting significant cash security deposits, even though New York law requires they be deposited in a separate account and not commingled with the owner's general funds.

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