The signing of a lease for a rental property is an exciting step in the renting process. There are various fees and payments that everyone is familiar with when it comes to renting. These expenses include rent and utilities, as well as the need to pay for parking or storage on occasion. Another cost that tenants have to brace themselves for is the property security deposit. What is a security deposit? How much is it? When does it need to be paid? What is its intended purpose? Look no further, this article on the basics of rental property security deposits will assist you in resolving all of your security deposit concerns. That way, when it comes time to sign that lease and pay those rental costs, you’ll be as well-informed as possible.
What is a security deposit?
A tenant pays a property security deposit to a landlord or property manager before moving into a rental property. A security deposit is, in essence, a type of insurance for the managers or owners to protect their property from damage caused by the renters. The amount varies by area and property, but it usually corresponds to the monthly rent. The landlord or property manager holds the security deposit for the duration of the lease. Landlords refund the security deposit to tenants in full following an inspection of the rental to ensure it meets standards.
When do I pay my security deposit?
The security deposit is usually paid to the landlord or property manager before you can receive your keys for move-in. Tenants will generally pay when first signing their lease, which means they’ll also be paying for the first month’s rent and any other due fees. You may also be required to submit a rent deposit, which covers both the last and first month.
How much is a security deposit?
The amount a property manager or landlord can charge a renter as a security deposit is usually unrestricted in most places. However, in most cases, a security deposit is equal to one or two months’ rent. Landlords keep five main factors in mind when calculating the security deposit for their apartments:
- Laws in the area
- The cost of monthly rent
- The type and quality of amenities provided by the property
- Security deposits of competitive properties
- Rental application of potential tenant (credit score, criminal history and employment history)
What does a security deposit cover?
A security deposit can be used to cover a variety of expenses that arise during a tenant’s stay.
Property damage
Landlords most commonly use a security deposit to cover property damage. This damage must be beyond normal wear and tear.
Missed rent payments
At the end of the lease, the landlord or property manager can deduct any late fees or unpaid rent from the the security deposit.
Cleaning and key replacements
Landlords can also use rental property security deposits to cover any necessary cleaning services or to replace lost house keys.
When is the security deposit refunded?
The security deposit is refunded to the tenant if the terms of the lease are met. When does the landlord refund the security deposit? This varies by lease and location, but in most circumstances, the security deposit must be returned within 30 days after the tenant’s departure. The timeframe will be specified in your lease, so keep that in mind when signing it.
