What Can a Landlord Deduct From a Security Deposit?

A security deposit is a sum of money held by a landlord to cover specific costs from a tenant’s occupancy, such as breaches of the lease agreement. State and local laws govern the collection, holding, and return of these funds. These regulations define the legitimate reasons for keeping a deposit and dictate the rights and responsibilities of both parties. The deposit is a restricted fund for tenant-caused liabilities, not a landlord’s personal account.

Allowable Deductions from a Security Deposit

Unpaid Rent

The most common deduction from a security deposit is for unpaid rent. If a tenant moves out while owing rent for any period of the lease, the landlord can use the deposit to cover the outstanding balance. The lease agreement establishes the monthly rent obligation. Any failure to meet this obligation is a financial liability the deposit is designed to cover.

Damages Beyond Normal Wear and Tear

A landlord can deduct for property damage that exceeds “normal wear and tear,” which is the natural deterioration from using a property as intended. Examples include minor wall scuffs, faded paint, or slightly worn carpets from foot traffic. These are considered the landlord’s costs of doing business.

Damage, in contrast, results from negligence or abuse, such as large holes in walls, broken windows, or heavily stained carpets. A landlord can deduct the actual cost to repair this damage and restore the property to its pre-damage condition.

Cleaning Costs

Landlords can deduct cleaning costs if a tenant leaves the property significantly dirtier than it was at the start of the tenancy. The unit should be returned in the same condition it was received, minus normal wear and tear. If the property requires more than a standard cleaning, the landlord can charge for the reasonable costs of services. This can include deep cleaning carpets, scrubbing appliances, or removing abandoned trash.

Unpaid Utility Bills

If the lease makes a tenant responsible for utilities like electricity, gas, or water, a landlord can deduct unpaid balances from the security deposit. This is common when an unpaid bill could result in a lien on the property, making the landlord responsible for the debt. The landlord can use the deposit to settle these bills for the actual amount owed.

Other Lease Violations

Deductions can be made for financial losses from other specific lease violations. For example, if a tenant painted a room without permission and the lease forbids it, the landlord could deduct the cost of repainting. Another example is the cost of removing large items or trash abandoned by the tenant. The lease violation must cause a direct, quantifiable financial loss for the landlord.

Prohibited Deductions from a Security Deposit

Routine Maintenance and Upgrades

A landlord cannot use a security deposit for routine maintenance or property upgrades, as these are the landlord’s responsibility. This includes standard painting between tenants or replacing an appliance that failed due to age. The deposit is not for improving the property or preparing it for the next renter. For example, if a ten-year-old carpet is worn out, the landlord cannot charge the tenant for a new one. Any deduction must account for the age and condition of the item, not upgrade the property at the tenant’s expense.

Pre-Existing Conditions

A landlord is prohibited from deducting for any damages or defects that existed before the tenant moved in. Issues noted at the beginning of the tenancy, like a scratch on the floor or a pre-existing carpet stain, cannot be charged to the departing tenant. The security deposit is meant to cover damages caused by the current tenant only. If a condition was documented on a move-in checklist, the landlord has no legal basis to claim it as new damage.

Required Documentation to Support Deductions

Move-In and Move-Out Inspection Checklists

A detailed inspection checklist from the start and end of the tenancy is evidence for deductions. At move-in, the landlord and tenant should inspect the property together, with both parties signing a document that creates a baseline record of its condition. A similar inspection at move-out allows for a direct comparison to the initial report. This process identifies new damage and distinguishes it from pre-existing issues, protecting both parties from disputes.

Photographic and Video Evidence

Photographic and video evidence is a powerful tool for documenting a property’s condition. Before a tenant moves in, the landlord should take date-stamped photos or a detailed video of the unit. This visual record should capture the cleanliness and condition of all surfaces and appliances, corroborating the move-in checklist. The same process should be repeated after the tenant vacates. Comparing the “before and after” visuals provides a clear argument for deductions related to damage or cleanliness and can be persuasive in resolving disputes.

Receipts and Invoices

For any repair or cleaning deduction, a landlord must provide detailed receipts or invoices to prove the actual cost incurred, not an estimate. Documents should be itemized, stating the specific work and breaking down labor and material costs. If a landlord does the work themselves, they can charge a reasonable hourly rate and must have receipts for materials. This ensures deductions are for verified expenses and not inflated charges.

Lease Agreement

The lease agreement outlines the tenant’s responsibilities for the property’s condition at move-out. It may contain specific clauses on cleaning, painting, or repairs that provide the contractual basis for deductions. For instance, a lease might require professional carpet cleaning or that unauthorized alterations be reversed at the tenant’s expense. When a landlord makes a deduction based on such a clause, the lease is the evidence of the tenant’s agreement to that requirement.

The Deduction and Return Process

Preparing the Itemized Statement

After determining deductions, a landlord must prepare a written, itemized statement. This document must list each deduction, the reason for the charge, and the exact amount withheld. Vague descriptions are insufficient; the statement must be detailed, such as “Repainting living room wall to cover crayon marks – $150.” This provides transparency for the tenant. The total of all deductions is subtracted from the original deposit, and the remaining balance is returned to the tenant. This formal, legally required statement accounts for all withheld funds.

State-Mandated Deadlines

Each state imposes a deadline for the landlord to return the security deposit and provide an itemized statement. This timeframe, which varies by state, ranges from 14 to 45 days after the tenant vacates and returns the keys. The landlord is responsible for knowing and meeting this deadline. Failing to meet the deadline can have serious consequences. In many states, a landlord who is late forfeits the right to make any deductions and must return the entire deposit. They could also be liable for penalties, such as paying the tenant double or triple the amount of the deposit.

Delivering the Statement and Funds

The landlord must deliver the itemized statement and any refund to the tenant’s last known address, which is usually a forwarding address. Sending this package by certified mail with a return receipt is a common practice. This method provides the landlord with proof that they mailed the documents and funds within the legal deadline. The tenant will receive a check for the remaining deposit, if any, along with the list of deductions.

Disputing Improper Deductions

Review the Itemized Statement

A tenant who believes deductions are improper should first review the landlord’s itemized statement. Each charge should be compared against the tenant’s own documentation, like the move-in checklist and photos. This review can identify deductions for pre-existing conditions, normal wear and tear, or inflated charges. The tenant should also check if the landlord met the state’s deadline for providing the statement. Any discrepancies will form the basis of the dispute.

Write a Demand Letter

If a tenant finds improper deductions, the next step is to write a demand letter to the landlord. The letter should request the return of the wrongfully withheld funds, referencing the specific deductions being disputed. It should explain why the charges are invalid, citing evidence like the move-in checklist or photos. The letter should be professional, reference state law, and set a deadline for the landlord to respond, often 7 to 14 days. Sending the letter via certified mail creates a record of delivery.

Filing in Small Claims Court

If the demand letter is ignored or the landlord refuses to pay, a tenant can file a lawsuit in small claims court. This court handles monetary disputes below a certain threshold, and individuals can represent themselves without an attorney. It is an accessible venue for contesting security deposit deductions. The tenant will present evidence like the lease, inspection checklists, photos, and the demand letter to a judge. If the court rules for the tenant, it can order the landlord to return the funds and, in some states, award additional damages as a penalty.