Lease agreements are essential to the process of renting an apartment, and understanding each part of the lease agreement is equally important.
When you move into your new apartment, most landlords will have a rental agreement that includes language about a security deposit.
Much like you have the ability to purchase renters insurance, security deposits can serve as a bit of insurance for the landlord in case certain situations arise.
A security deposit, also often referred to as a damage deposit, is in place to allow a landlord to deduct items from the tenant that are detailed in a lease agreement.
The rest of this brief discussion will discuss exactly when landlords deduct items from a security deposit and what things the landlord can deduct from a security deposit.
What is Deducted from My Security Deposit?
A tenant’s security deposit is funds deposited upfront to protect the rental unit from damages or unpaid rent (more on this shortly).
A tenant security deposit usually equals either the first month’s rent or a month and half’s worth of rent.
Security deposits can help when individuals vacate before their lease is up, as it benefits a property owner or landlord to cover some unpaid rent when this occurs.
Security deposits are extremely common, and it would be difficult to find an apartment or any rental situation that does not require one.
In fact, security deposit laws even exist in most states. The security deposit laws will help dictate how a security deposit can be used by the landlord and what situations require the landlord to return it to the tenant when the tenant leaves or moves.
Many items cause concern for renters when it comes to knowing if landlords will deduct from a security deposit.
Let’s do a full breakdown of everything that a landlord could deduct from a security deposit and what you can potentially do to avoid it happening.
Unpaid Rent and Unpaid Utilities are Normally Deducted from Security Deposits
This is not overly surprising to hear. Leaving your apartment early or before all rent due has been paid can result in deductions from your security deposit.
It is one of the biggest reasons security deposits exist outside of significant damages and cleaning costs. Learn how to reduce dust in an apartment here.
Suppose you intend on leaving your apartment early or even on the agreed-upon date and want your full security deposit returned to you. In that case, you will want to ensure your rent is paid in full.
It is also important to note that a security deposit only works one way between the tenant and the landlord. While the landlord can hold funds from your security deposit to cover late fees and unpaid rent, the tenant cannot opt to use a security deposit to cover rent. The same is the case when it comes to unpaid utilities.
Suppose you still need to pay your electric bill, water bill, gas bill, or other utilities that are expected of you as detailed in your lease agreement. In that case, your landlord can attempt to cover these outstanding charges using your security deposit.
Again, you can not opt to use your security deposit to pay these utility bills from your side, and late fees could be levied for late payments.
Outside of unpaid rent and utilities, the most common items to see deductions or loss of a security deposit fall under the category of damages.
Cost for Damages within the Apartment Will Come Out of Your Security Deposit
When you rent an apartment, it is not unreasonable for the property owner or landlord to expect the property or apartment to be returned to them in the condition it was rented.
Hence, significant damages, unnecessary or extensive messes, or even large left behind items may end up dinging your security deposit or potentially removing all possibility of a security deposit being returned to you all together, depending on the extent of the damages.
Normal wear and tear is expected and will not be deducted from your security deposit. This can include items such as faded paint and worn carpet after so many years.
On the other hand, it is easy to understand the difference between normal wear and tear and significant repairs or items that lean more towards negligence by the tenant.
Items like this could include things such as damaged or broken appliances, holes in walls, or burn marks in carpet.
Items to Look Out For
When you move into your apartment, it would be a good idea to test and ensure everything is working correctly and document the testing.
Let’s use appliances as an example. It is advised, before vacating an apartment, that with appliances you take a moment and determine if it could be considered normal wear and tear or something that will need repair.
For instance, A/C units are known to have a certain lifespan, and it is possible that needing it to be replaced was not your fault. Also, dishwashers can become clogged in the hoses, which is not necessarily your fault.
You get the point. Appliances, unless it’s clear as day that it was damaged due to negligence, are an item that is worth discussing with a landlord before allowing your security deposit to be taken to cover said damages.
Other damages that may ding your security deposit include, but are not limited to:
● Ripped or Stained Carpet
● Stains from Pets (always review the apartment pet policy)
● Broken Windows
● Broken Doors
● Mixing Fixtures
● Large Messes
● Drywall Repairs
The next most common question regarding security deposits typically pertains to individuals who have kept their apartments in great shape and all bills are paid in full.
When will a Security Deposit Be Returned to the Tenant?
The good news is that the language for a security deposit being returned to a tenant is typically very clear and detailed within the apartment lease agreement.
While some states may have different time frames, the landlord in Michigan has 30 days to return a security deposit and send a breakdown of all the deductions to a tenant once they have vacated the premises.
Again, this assumes that any security deposit is left to be returned after all deductions. If there is no money left to be returned, then just an itemized statement outlining all of the deductions will be sent to the tenant.
The landlord will typically either give the option of either picking up the security deposit l payment or having it mailed to the tenant using their forwarding address.
The 30-day timeline may vary from state to state; so if you are curious or have questions about this, it is best to ask the landlord or hire a lawyer to review your apartment lease agreement.
The Takeaway: Take Care of Your Apartment if You Want Your Full Security Deposit Returned
Rental property owners must protect their properties, and security deposits are one way that help them do so.
On the flip side, security deposits can be a substantial amount of money. So, not having it returned when you vacate the property can be a significant loss.
Do a detailed walk-through of the apartment before signing your lease and take pictures and notes of any damages so you are not held responsible for them later.
Also do a detailed walk-through of the apartment when you vacate the property.
Ensure your utilities are paid in full and your rent is all caught up. You will typically be able to get your security deposit returned to you in full if you follow these directions.