How Much Should a Tenant's Security Deposit Be?

What Should Landlords Collect From Tenants as Deposit?

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Question: How Much Should a Tenant's Security Deposit Be?

Answer:
How much a tenant's security deposit should be is based on 3 factors:

1. Statewide Law

2. Price of Rental Unit

3. Property Amenities

1. Statewide Law Determines Security Deposit

How much you can collect from a tenant as a security deposit may be determined by the state where your property is located. Twenty-five states have no limit on the maximum amount you can collect and 25 states, plus the District of Columbia, do set a maximum limit on how much you can collect.

  • States With Limits

In states that do have a security deposit limit, such as North Carolina and Nevada, the amount you can charge varies from as little as two weeks' rent to as much as three months’ rent.

As an important note, these are statewide limits. You must also know the laws of your local municipality, because they may impose different rules and regulations than the statewide level.

  • States Without Limits

Many states, such as Florida and Texas, do not place limits on the security deposit. In states such as these, a landlord is free to charge a tenant an amount of their choosing, but landlords find it is often in their best interest to keep their security deposits on par with other landlords in the area so they have an easier time finding tenants.

2. Rental Price of the Unit

A second factor that influences how much you can collect as a security deposit is the price of your rental unit. This price will influence the deposit regardless of whether your state has limits on the maximum amount you can collect.

 

  • States With Limits

If your state has specific laws which limit security deposits, then the maximum you can charge is based on the monthly rent of your unit. Say your rental property is in Maryland, where the security deposit limit is two months' rent. The monthly rent of your unit is $1,000. Therefore, the most you can charge as a security deposit is $2,000, or two months' rent.

  • States Without Limits

Even if your state has no limit on security deposits, the security deposit you collect will still be based on the monthly rent of the unit. It has become common practice that security deposits are based on some portion of the monthly rent. It is usually accepted to ask for the equivalent of half or whole month's rent. For example, if the monthly rent is $1,000, a security deposit of $500 would be a half month's rent. A security deposit of $1,000 would be a whole month's rent. It is uncommon to ask for other percentages, such as one-quarter or one-third of a month's rent.

3. Property Amenities

A third factor in determining how much a tenant's security deposit should be are the amenities of the property or of the unit. Some examples of amenities which could warrant higher security deposits are:

  • Elevator in Building
  • Doorman in Building
  • Private Parking
  • Fully Furnished Unit
  • Washer/Dryer in Unit

Of course, if your state has a security deposit limit, then you cannot charge a tenant more than this for the security deposit, regardless of the amenities the unit has.