Most residential leases include a security deposit. The purpose of a deposit is to set aside funds for the landlord to make any needed repairs at the end of the lease term for damage done to the property in the course of the tenant’s residence. Each state has rules regarding the amount the property owner can charge as well as rules regarding how the deposit gets returned. Under Pennsylvania law, a landlord can charge two months’ rent for the security deposit for the first year of rent, and one month’s rent for a security deposit for subsequent years. A landlord must return the security deposit and/or provide a list of needed repairs and resulting deductions within thirty days of a tenant surrendering the property, which occurs when a tenant returns the keys and moves out of the residence. A landlord can deduct when returning the security deposit for extra cleaning or repair costs that do not fall under typical wear and tear. In Pennsylvania, if a security deposit is over one hundred dollars, the landlord must deposit it in a state or federally regulated institution and provide information about the location to the tenant.
Under Delaware law, landlords can require one month’s rent for a deposit for the first year, and for a month-to-month lease there is no set legal limit for a deposit. Landlords in Delaware can require an extra deposit for pets. A tenant can opt to present a surety bond in addition to or in place of a security deposit, which the landlord can accept or reject. A landlord must return the security deposit within twenty days of a tenant surrendering the property, complete with a list of deductions from the deposit. Like in Pennsylvania, landlords cannot deduct for normal wear and tear. Landlords must similarly provide information regarding the location of the deposit to their tenant. There is no set dollar amount for being obligated to provide the information. Further, in Pennsylvania, tenants are entitled to interest paid on the deposit starting with the twenty-fifth month of rental.
In New Jersey, a landlord can charge up to one and a half month’s rent for a security deposit. A landlord may also collect an additional deposit that is no more than ten percent per year of the current deposit by the tenant. A landlord must return the deposit within thirty days of the tenant surrendering the property, unless there is an extenuating circumstance such as fire or flood, in which case the deposit must be returned in five days. Like Pennsylvania and Delaware, a New Jersey landlord must disclose the location of the deposit within thirty days of receiving the deposit and every time the landlord pays the tenant interest. One point worth noting is that in New Jersey, deposit laws do not apply to an owner-occupied buildings with three or fewer rental units. They only apply if the owner decides to follow the laws. The tenants must then be given thirty days’ notice of this change.
