A security deposit is a payment required by a landlord to ensure that a tenant pays rent on time and keeps the rental unit in good condition.
Cases such as this one from Connecticut, explain that “security deposit is money deposited by a tenant with a landlord as security for full and faithful performance by the tenant of the terms of the lease, including damages to premises.”
The laws of most states limit the size of a deposit, dictate its use, and set specific rules for when and how landlords must return the deposit. For example, in California, the security deposit for residential property may equal 2 month’s rent for unfurnished rentals or 3 month’s rent for a furnished rental, and the number of days to return the deposit funds is 21 days after the tenant moves out. For more information on security deposits, click here.
[Last updated in July of 2021 by the Wex Definitions Team]