Sample Security Deposit Lease Agreement

5 Things You Must Include in Your Security Deposit Agreement

Getty Images

Every lease agreement should include a security deposit clause. While each landlord has the ability to personalize this clause, the state in which your rental property is located may have certain security deposit laws that you must follow. Regardless of your state laws, there are certain basics about the security deposit terms that you should always include in your agreement. The following is a sample.

5 Basics Every Security Deposit Agreement Should Include:

1. Amount: The lease clause should include the exact amount you will collect as a security deposit.

2. Storing Deposit: The lease clause should include the terms of how you will store the tenant's security deposit. Some states require you to hold the deposit in escrow, others do not.

3. Interest Rate: Certain states will require you to place your tenants' security deposits in an account that earns interest. You must let your tenants know the interest rate their security deposit will be held at.

4. Keeping the DepositThe deposit agreement should include the reasons you can deduct money from the tenant's security deposit.

5. Returning Deposit: Include the process for returning a tenant's security deposit. You will have to return the deposit within a certain number of days, depending on your state's law, of tenant move-out.

Sample Security Deposit Clause:

The following is a sample of a security deposit clause in a lease agreement.

These clauses can range from a couple of sentences long to a few paragraphs long. 

Security Deposit. Before moving into the Apartment, the Tenant is responsible for depositing $ Insert Security Deposit Amount as a Security Deposit with the Landlord. This Security Deposit is security that the Tenant will comply with all the terms of this Lease. This Security Deposit may not be used to pay the last month’s rent without the Landlord’s prior written consent.

The Security Deposit will be held at Insert Bank Name in a business savings account at an interest rate of Insert Interest Rate. The address of the bank is Insert Address of Bank. Interest due to the Tenant will be credited as rent on each renewal date of this Lease. If there is no Lease renewal, the amount of Interest owed will be returned to the Tenant according to the same terms set forth for the original Security Deposit.

If the Tenant breaks or otherwise violates this Lease prior to the official move-out date, the Landlord may be able to keep all or part of this Security Deposit to cover unpaid rent and or/damage to the property.

Upon Tenant’s office move-out date, the Landlord will inspect and document the condition of the Tenant’s apartment. Within 30 days of the end of this Lease agreement, if the Tenant has supplied the Landlord with a forwarding address, the Landlord will do one of two things.

1. If the Tenant has complied with all terms of this Lease and returns the Apartment to the Landlord in the same good condition as when Tenant moved into the apartment, the Landlord will return the $​ Insert Security Deposit Amount plus any interest earned.

or

2. The Landlord will provide the Tenant with a written notice including an itemized list as to why the full Security Deposit amount is not being returned to the tenant and a check for any remaining Security Deposit owed to the Tenant after the allowed deductions have been made.

The Landlord may use as much of the Security Deposit as necessary to pay for damages resulting from the Tenant’s move-in, occupancy or move-out and demand that the Tenant replace the amount of the Security Deposit used by the Landlord.

If the Landlord sells the property, the Landlord will then be released of all liability to return the Security Deposit. The new property owner will take over full responsibility for holding and returning the Security Deposit.

*The Landlord will fully comply with the Rent Security Law (N.J.S.A 46:8-19 et seq.). This includes depositing the Security Deposit in an interest-bearing account, and notifying the Tenant of the name and address of the banking institution and the amount of the Security Deposit being held. This document shall serve as such notice.

An additional Deposit in the amount of $​ Insert Amount will be due for any animals found in Tenant’s apartment.

*(This portion of the clause is specific to the state of New Jersey. Your state may or may not require you to hold the Tenant’s Security Deposit in a separate interest bearing account. You would insert your own state law in this part of the Lease as well as the legal requirements in your state. Check here for a list of security deposit laws by state.

Many landlords will include an attachment to the Security Deposit clause, known as the Security Deposit Acknowledgment. This acknowledgment is a receipt that the landlord has received the tenant’s security deposit and the amount that has been received.

Disclaimer: The information provided on this website, and any outside information linked to, is for guidance only. It is not legal advice. Please consult legal counsel for advice specific to your situation.