- The Washington Times - Wednesday, April 19, 2006

Every state has its own laws regulating the care of security deposits from renters.

The first rule from every state is to the landlord, reminding him or her that the security deposit is not their money. The security deposit comes from the tenant and belongs to the tenant until the term of the lease expires.

State laws govern the handling and care of the security deposit, from how much it can be, where it has to be deposited, how much annualized interest it must earn, what can be taken out of it at the end of the lease, and the time when it’s supposed to be returned to the tenant.

FindLaw.com has a state-by-state listing of how much landlords are allowed to charge for deposits. The highest is “no statutory limit.” Nearly half the states have no limit on deposits.

California has the highest regulated security deposit allowance — up to 31/2 months’ rent. States with limits stand between one and two months’ rent. If your rent is $1,500, the most a landlord could charge in Virginia and Maryland, for instance, would be $3,000, where landlords are allowed to charge up to two months’ rent for deposit.

The market also plays a role in limiting landlord’s fees. While the law applies no limits in 24 states, most people are going to walk away from a rental where the landlord wants too much money upfront. The market limit may be one or two months’ rent. Charge more and your unit might never get rented.

It may be some comfort to tenants to know that the security deposit is not just a free loan to landlords. Real estate law and state regulations limit what the landlord can do with the money. First of all, they must not commingle the funds in personal accounts. Your landlord should have a separate account established for deposit money. The check goes into that account and is held until the end of the lease.

Unfortunately, if you check violations with the state real estate commission, the commingling of funds requirement is also the one most violated. Often, it is out of ignorance. If you’re concerned about your deposit money, require your landlord to provide a copy of the deposit slip, showing that it has been deposited.

Some jurisdictions require that deposits be placed in an interest-bearing account.

And that brings up the final point about security deposits: How much are you going to get back at the end of the lease?

A security deposit is strictly to protect the landlord from damage to his or her property outside of usual wear and tear.

If your cat has marked his territory throughout the house and ruined the carpet, you may have just lost your deposit. If the carpet has just aged from normal use and is not damaged, then you should not lose your deposit so the landlord can replace the carpet for new tenants.

Legal advice Web site Nolo.com has a good list of deductions.

Here are a few of them:

Ordinary wear and tear, landlord’s responsibility:

• Curtains faded by the sun

• Water-stained linoleum by shower

• Minor marks on or nicks in wall

• Dents in the wall from door handle bumping it

• Moderate dirt or spotting on carpet

Damage, tenant’s responsibility:

• Cigarette burns in curtains or carpets

• Broken tiles in bathroom

• Large marks on or holes in wall

• Door off its hinges

• Rips in carpet or urine stains from pets

To protect your security deposit, here are some tips on how to make sure you get as much or all of it back at the end of the lease:

m Be aware of your lease requirements. I get e-mails all the time from tenants who just simply signed a lease and never read over it, never knowing that some of the things they did to the apartment or house were going to be repaired from funds out of the security deposit.

• Conduct a move-in inspection. Most jurisdictions have a move-in inspection form whereby the landlord and tenant can walk through and note defects in the property at the time of move-in. Holes in the wall, stains on the carpet, discoloration of fabrics and working order of appliances can be noted and discussed as to responsibility of the tenant or the landlord to have it fixed.

• Take care of the property. While you may be renting the house and the landlord is responsible for providing a functioning dwelling for you, this doesn’t mean that the landlord gives carte blanche to the tenant. If the garbage disposal breaks because you’ve allowed your silverware to continually dump down into it, the landlord may have a word with you about who’s going to pay for it.

• Return the property to move-in condition when you move out. Keep your move-in inspection form in a secure place so you can substantiate that you have left the property in as good or better condition than when you moved in. The primary argument between landlords and tenants over deposit money is because of the property condition at the end of the lease and who should be responsible for fixing, cleaning or repairing it. With the advent of digital photography with date stamps, this task has gotten even easier.

When it comes to the security deposit, all parties need to understand the rules and requirements.

M. Anthony Carr has written about real estate since 1989. He is the author of Real Estate Investing Made Simple. Post questions and comments at his Web log (http://commonsenserealestate.blogspot.com).

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