Security Deposits are one of the most challenging topics for Landlords and Tenants to deal with.
The purpose of a deposit is to protect a landlord in the event a tenant does not comply with the terms of the rental agreement. This could happen if the tenant doesn't pay rent, leaves before the term of the agreement is up, leaves a mess when they move out or causes damage to the unit which is beyond normal wear and tear.
In the past, landlords collected the last month's rent and an additional security deposit. The deposit was smaller than a month's rent, usually a couple of hundred dollars. More recently, the practice of collecting last month's rent has disappeared and security deposits are higher, usually equal to at least one month's rent.
This "standard" security deposit is reserved for tenants that meet all of the qualifications with regard to income, credit and landlord references. If an applicant does not meet the qualifications in al of these areas, landlords should increase the required deposit. This makes sense because when all of the qualifications are not met, there is an increased risk that the tenant will not fulfill all of the terms of the rental agreement.
Security Deposits are defined as any monies collected from the tenant other than rent. Beside the normal "security deposit" this includes key deposits, pet deposits, cleaning deposits and even last month's rent or any additional rent which is not for the first month. In short, a security deposit includes ANY monies collected other than first month's rent.
The maximum amount of deposit that can be collected is a matter of law. If the rental unit is unfurnished, meaning furniture and household items are not supplied, the maximum deposit allowed is two times the monthly rent.
