A security deposit is an amount of money given to the Landlord by the Tenant that can be used by the Landlord to offset unpaid rental payments due to a default or premature vacation by the Tenant, as well as for necessary repairs and cleaning. Most states limit the amount that can be collected to one or two months' rent. This cap may differ depending on the type of lease (more can be collected for a long-term lease, where the property is furnished, or where the Tenant will have a pet or waterbed, etc.).

In addition, some states require that the security deposit be retained in a separate account, and sometimes, in an interest-bearing account. A few states require that the Landlord inform the Tenant of the name of the banking institution where the funds will be held.

It is recommended that you not accept a personal check for the security deposit or the first month's rent. Instead, you should require cash, money order or cashier's check. The reason is because once the Tenant moves in (even a "few things"), you must go through the expensive and time-consuming eviction procedure to have the Tenant involuntarily removed. If the Tenant's initial check bounces, you have nothing with which to offset these costs.

GENERAL PROVISIONS

A lease should include provisions that: (i) make it clear that the document contains the entire agreement of the parties, (ii) require any changes to the agreement to be in writing, signed by both parties, (iii) preserve the remainder of the agreement if one of its provisions is unenforceable, (iv) make it clear that the rights of the parties are cumulative (can use all rights) rather than exclusive (limited to the right that is exercised first), and (v) specify which state's laws will govern any dispute between the parties. This program designates the state where the leased property is located as the state whose laws will govern the lease.

FOLLOWING IS A LIST OF STATES REQUIREMENTS REGARDING SECURITY DEPOSITS

Alabama
Oral and Written contract are valid. No statute.

Alaska
Oral and Written contract are valid. Landlord must disclose the conditions under which landlord may withhold all or part of the deposit

Arizona
No statute

Arkansas
No statute

California
Must be in writing. No earlier than two weeks before tenancy ends, landlord must advise tenant of the right to a pre-move-out inspection and tenant’s right to be present.

Colorado
No statute.

Connecticut
No statute.

District of Columbia
Must be in writing, either in the lease, or separately. In the rental agreement or in the receipt, the landlord must state the purpose of the security deposit.

Delaware
The landlord must disclose to the tenant the location of the security deposit account.

Florida
Must be in writing. Within 30 days of receiving the security deposit, the landlord must disclose whether it will be held in an interest- or non-interest-bearing account; the name of the account depository; and the rate and time of interest payments. Landlord must include a copy of Florida Statutes, section 89.49(3).

Georgia
Must be in writing. Landlord must place the deposit in an escrow account in a state or federally regulated depository, and must inform the tenant of the location of this account.

Hawaii
No statute.

Idaho
No statute.

Illinois
No statute.

Indiana
No statute.

Iowa
No statute.

Kansas
No statute.

Kentucky
Orally or in writing. Landlord must disclose where the security deposit is being held and the account number.

Louisiana
No statute.

Maine
Orally or in writing. Upon request by the tenant, landlord must disclose the name of the institution and the account number where the security deposit is being held.

Maryland
Must be in writing. Landlord must provide a receipt that describes tenant’s right to move-in and move-out inspection.

Massachusetts
Must be in writing. Within 30 days of receiving security deposit, landlord must disclose the name and location of the bank in which the security deposit has been deposited, and the amount and account number of the deposit.

Michigan
No statute

Minnesota
No statute

Mississippi
No statute

Missouri
No statute

Montana
No statute

Nebraska
No statute

Nevada
Must be stated in the lease. Lease or rental agreement must explain the conditions under which the landlord will refund the deposit.

New Hampshire
Must be in writing. Landlord must provide a receipt stating the amount of the deposit, and the institution where it will be held, and stating that if tenant finds any conditions in the rental unit in need of repair, tenant may note them and return the receipt within five days. Upon request, landlord must disclose the account number, the amount deposited, and the interest rate.

New Jersey
Orally or in writing. Within 30 days of receiving the deposit and specified times thereafter, landlord must disclose the name and address of the banking organization where the security deposit is being held, the type of account, current interest rate, and the amount of the deposit.

New Mexico
No statute.

New York
Must be in writing. Landlord must disclose the name and address of the banking organization where the deposit is being held, and the amount of the deposit.

North Carolina
Orally or in writing. Within 30 days of the beginning of the lease term, landlord must disclose the name and address of the banking institution where the deposit is being held.

North Dakota
No statute.

Ohio
No statute.

Oklahoma
No statute.

Oregon
No statute.

Pennsylvania
Must be in writing. For deposits over $100, landlord must deposit them in a federally or state regulated institution, and give tenant the name and address of the institution, and the amount of the deposit.

Rhode Island
No statute

South Carolina
No statute

South Dakota
No statute

Tennessee
Orally or in writing. Landlord must disclose the location of the separate account used by landlord for the deposit.

Texas
No statute.

Utah
Must be in writing. For written rental agreements only, if part of the deposit is nonrefundable, landlord must disclose it.

Vermont
No statute

Virginia
No statute

Washington
Must be included in the lease. Landlord must disclose the circumstances under which all or part of the deposit may be withheld, and must provide a receipt with the name and location of the banking institution where the deposit is being held.

West Virginia
No statute.

Wisconsin
Must be in writing. Before accepting the deposit, landlord must inform tenant of tenant’s inspection rights.

Wyoming
Must be in writing in the lease. Lease or rental agreement must state whether any portion of a deposit is nonrefundable, and landlord must give tenant written notice of this fact when collecting the deposit.