All rent agreements require a Security Deposit. A security deposit provides assurance for landlords that a tenant will adhere to the rent agreement's timelines.
Money from a security deposit can be used for the cost of repairs for any damage to the property caused by tenants during their stay. If the cost to fix the damage exceeds the amount of the security deposit, the tenant will be responsible for the difference.
Furthermore, a security deposit can also serve as a reservoir for funds if a tenant does not pay rent for a particular month. If this happens, the landlord will not return the security deposit when the tenant moves out.
What you need to know
Does a landlord need to provide receipts for repairs?
If a landlord uses the security deposit for repairs, the landlord should issue the tenant a receipt after collecting the last month's rent and the security deposit. The tenant should request one if he does not have one. In several states, the landlord must provide a receipt to the tenant.
Why is a receipt for a security deposit important?
Landlords should always provide tenants with a receipt for their security deposits. Receipts provide evidence that the deposit was received and names each party involved in the contract.
The receipt generally ties the security deposit payment to the rental property's address and the lease agreement between the tenant and the landlord.
What to include in the Security Deposit Receipt?
We recommend providing the following information on the receipt for best practices:
- The sum of the Security Deposit that was paid
- The date on which payment was received
- The payment's intended purpose
- Contacts of the person who received the payment
- The landlord's name for whom the rent is collected if an agency is engaged
- The landlord's or agent's signature
The tenant should notify the landlord where to send a check for the return of their deposit at the end of the tenancy.
