What Can I Deduct or Withhold From a Security Deposit?

Written on February 24, 2016 by , updated on November 1, 2017

Security Deposit DeductionsThe rules for handling and deducting from a security deposit are commonly misunderstood. This article will clarify the legitimate reasons for withholding all or part of a security deposit from a tenant.

Best Practices for Withholding a Security Deposit

It’s a common scenario: your tenant pays you a security deposit before moving in, which gives you some peace of mind that the money will pay for certain items or damages when the tenant moves out.

When move-out day arrives, the tenant says they left the unit spotless, but the floor wasn’t even swept. Or worse, there are broken windows, an unidentifiable sticky liquid all over the fridge, and a clogged shower.

…only withhold deposit monies for actual damages, material or financial.

The general rule is that a landlord or manager can only withhold deposit monies for actual damages, material or financial. Meaning, you can deduct money if they owe you past due rent and fees, or caused damages beyond normal wear-and-tear.

State laws vary greatly, but there are generally some statues that regulate the basics such as:

  • whether or not you must put the money into an interest-bearing account,
  • if you can or cannot commingle such deposits with your personal or business accounts
  • what you can or can’t deduct from a tenant’s security deposit
  • the timeframe in which you must return the deposit or supply written notice of why you aren’t returning all or part of it.

Things to Remember:

  1. Always fill out an “Inventory/Condition Checklist” before the tenant moves-in so that there is a baseline for comparison. (Download a Move-in/Move-out Checklist)
  2. Provide the tenant with an itemized receipt of any deductions before returning any money. (Download a Free Deposit Receipt Template)
  3. Take plenty of pictures of the damages and overall condition after each move-out.
  4. Follow your state’s rules and timelines for returning the deposit.

Let’s talk about some basic general rules for deducting and withholding deposits.

Related: How to Handle Security Deposits Properly

Breaking the Lease

You can’t automatically keep a deposit just because your tenant abandons the lease or breaks a rule in it. Again, you must have actual damages to offset your claims against the deposit.

If the tenant leaves you high and dry with unpaid rent, utility bills, late fees, and parking fees, then you could withhold some or all of the deposit to cover the debt. A lease is a contract, and if the tenant breaches it, you can take them to court if they don’t pay.

Practically speaking, unless the debt is multiple thousands of dollars, going to court is often more trouble than it’s worth. Even if you receive a judgment, you still have to collect it from the former tenant. Most landlords opt to keep the security deposit and look for a suitable new tenant.

Abandonment and Unpaid Rent

If the tenant abandons the lease and stops paying rent, you almost certainly will have a claim because it takes a few weeks, if not months, to find a replacement tenant. Your previous tenant would still be responsible for rent during that time, and if he/she didn’t pay, then you could withhold the deposit to offset the unpaid rent, and sue them for any remaining balance.

Note: if you keep a month’s worth of rent from the deposit, but don’t actually have a vacancy that is a month-long, then you would need to give back any overlapping funds.

You can’t “double dip” on the rent! Do the right thing!

Since most security deposits cover only one or two month’s rent, it’s important to start eviction proceedings as soon as possible if the tenant makes no attempt to pay.

If you’re not familiar with the eviction process in your area, hiring an attorney is wise. It’s not okay for the tenant to forego paying the final month’s rent under the assumption you’ll apply the security deposit to it – so don’t use the deposit for last month’s rent.

Related: How to Evict a Tenant – The Eviction Process in 8 Easy Steps

Normal Wear and Tear

Every property suffers some normal wear and tear, and you can’t deduct that basic upkeep from the security deposit. If the tenant cleans regularly, then the landlord is always responsible for normal wear and tear.

The general rule of thumb is that a landlord is not allowed to deduct from the tenant’s security deposit for “normal wear and tear”.

Normal wear and tear typically includes the following:

  • General rug wear
  • Sun-faded wallpaper or paint
  • Nail holes in walls from picture hangings
  • Bathroom mirror desilvering
  • Appliances no longer working, but not due to misuse
  • Warped windows or doors, due to temperature or age
  • Dirty draperies or blinds

Texas, as well as other states, define “normal wear and tear” as:

“…deterioration that results from the intended use of a dwelling…but term does not include deterioration that results from negligence, carelessness, accident or abuse of the premises, equipment or personal property by the tenant, by a member of the tenant’s household or by a guest of the tenant.”

Meaning, if a tenant was simply living in the property the way it was intended, and did not damage anything by means of abuse, negligence, accident, guests, animals, or lack of normal cleaning, then a landlord has no right to any deposit deductions. Since HUD doesn’t have an official list of acceptable deductions, landlords have to go by their state rules (if any exist), personal experience, and their gut feeling.

Property Damage

clean-ad

If your tenant or their guests cause excessive damage to the property, you can use the security deposit toward repair or replacement. Some damage is fairly obvious, such as big holes in the wall or floor, or broken fixtures. Other conditions, not so immediately apparent, are also deductible from the security deposit.

These could include but not limited to:

  • Missing smoke or carbon monoxide detectors
  • Flea extermination, if a pet lived on the premises
  • Broken or missing window blinds
  • Appliances broken due to negligence.
  • Dirt and filth as a result of in adequate clean
  • Any damages caused by lack of common sense or improper use (like sliding down a stair handrail)

Even if you find some excessive damage after the deposit was returned, you can still send an invoice to the tenant. However, the chances of receiving that money is slim to none.

Cleaning

clean-up

If you have to pick up and dispose of a few minor items after the tenant is gone, that’s not grounds to withhold part of the security deposit. And quite honestly, it’s just not worth the effort to deduct money for a few items. However, if the tenant left junk and trash all over the place, or food rotting in the fridge, that’s a different story.

Many leases specify that a tenant should leave the property in “broom clean condition,” or terms to that effect.

I’ve never really liked this term because a tenant could potentially sweep the apartment, but leave the stove, fridge, and closets a complete mess. Without more specific language in the lease, you’ll eventually regret using the term “broom clean”.

Related: How to Get Your Tenants to Clean Regularly in 5 Easy Steps

Painting

Many landlords repaint the interior of the rental property to attract a new tenant. It’s routine and usually performed every few years, so you can’t deduct the costs of hiring a painter or purchasing paint from the security deposit.

However, if the tenant painted the walls some hideous shade or drew “art” on them, the cost of repainting is deductible – but only for the affected rooms. The same holds true if the repainting is necessary because the tenant or guests smoked in the dwelling, causing staining on the walls.

Likewise, if the tenant painted without your permission (lease clause required), you would be able to deduct the cost of a painter and supplies to return the wall to its original color compared to when they moved in. Although, if the paint color is neutral and nicely executed, then you might want to consider thanking your tenant for painting!

Related: Tip #4: Paint Walls a Neutral Color

Provide Receipts

Make sure to document all the necessary repair work to prove your expenses. In most states, such documentation is required above a fairly nominal monetary amount ($126 in California).

If you deducted money and the funds are unsubstantiated, the tenant may take you to small claims court. Many times, the tenant can be awarded 2-3 times the deposit amount if you wrongfully withheld anything.

Related: 7 Tips for Preventing Security Deposit Disputes

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106 CommentsLeave a Comment

  • Sal

    Hi all, I hope you can help me understand an issue on this topic. I’m a now former tenant who will gladly accept any charges/withholdings that are fair and considered standard, however I received a list of charges including some that strike me as questionable.
    The first is a $750 charge for the landlord’s personal time spent checking on repairs and hiring workers and repairmen (not DOING repairs, just arranging and supervising them; there are separate charges for actual repairs which are actually less than the charges for her time!)
    The second is $500 for “lost rent” because the condo couldn’t be shown while the repairs were being done.
    I know little about your surely difficult work as landlords, so I hope you can help.
    Thank you!!

    • Lee Lew

      Hello,

      I’m a landlord. They cannot hold your security deposit for either situations. A walk through is normal responsibles as well as the process it takes to fix things especially if it’s due to normal wear and tear.

  • nicole

    HI! so my landlord decided to keep 100% of my deposit despite me hiring cleaners, repainting, and the home being left in better shape then when I moved in 2 years prior. They also over charged me on basically every deduction they made. In addition it took 21 days to get a response and I didn’t get the list of deductions back for 26 days.. and at that point it was incomplete. My landlords were also out of town for 3 weeks so didn’t even look at my place for 3 weeks in which time it was vacant. And now are saying the ac unit was missing, but it was there when I vacated. I moved from there to another state so now im two states away, what should I do? sue anyway?

    • Lee Lew

      Hello,

      The security deposit can not be withheld in this situation. The only thing they can probably deduct is if the AC unit was there before you moved in as an appliance. They can only charge around $50 since that’s the price it will cost to get a used one.

  • Zsanett Fabian

    After 10 years of renting from my landlord, I bought a house and moved. Gave 2 months notice, paid the last month in full, even though I was only there for 6 days. Now, he is telling me that there were times when I didn’t pay rent and he doesn’t have my deposit. That is not true and asked him to provide me with the month(s) and year. He said he would but its been over a week and nothing.

    He has to provide proof that I did not pay any rent, correct?
    What are my options?

    Thank you.

    Z

    • Lanlord

      After 10 years of living there, i’d be almost positive the amount of damage and cleaning would barely be covered by a deposit. Be careful pushing as he could always counter claim and come after you for more if he can proove the repairs that were done after your move out were more than the deposit.

      The deposit amount should be on the leasae that he signed.

  • Heidi

    Ive just become a property manager, and my first tenet has moved out. They moved and did not return the keys to me. She gave the keys to the neighbor upstairs. I was wondering what’s the process to this situation? How do I go about this, as far as returning her security deposit?

  • Lynn

    Tenants just moved without cleaning, mowing the lawn. There are holes (larger than picture hooks) in every room and in the bedrooms the tenant painted animals on the walls. I asked the tenant to repaint the bedrooms (this is before they moved and I found all the holes) and they refused. Tenant knows we are selling the house. Additionally they removed bushes and flowers. The pull out drawers to my pantry (which I left with coverings) are all stained and filthy. The whole house is filthy. I am disabled and cannot do heavy cleaning or paint. What can I deduct from their deposit.

  • Stacey

    My husband and I just moved out of a condo we have been living in for 5 years. The landlord is saying that the oven is too dirty and that there is a ring around the toilet and is trying to withhold out $1100.00 deposit. We lost the pictures we took when we moved in when my phone was stolen, but the over was not in good shape when we moved in and the toilet had a small ring around the toilet. She also has no pictures from when we moved in and the condo was vacant for 2 years prior to us moving in.

    Can she do this?

  • Avinash

    i vacate house before agreement overs 5days before

    *in agreement 3 months notice period is their but i didnt inform before 3 months
    but he deducted 3 months rent in my deposit money is it corret if i go with legally can i get my amount back please respond

  • RUBY RAJKOWSKI

    I am trying to help an elderly developmentally disabled man get his security deposit back . The land lord wants to charge him for a gallon of paint (which is ok since tenant tried to cover a ceiling stain by touching up with a color that didn’t match) but he wants to also take out extra to cover his own time to do the painting. Can they charge for their own time? The elderly man was in the apartment for 5 years. The kitchen counter top by the stove has some stains on it and brown rings that could be from the bottom of hot pans. They do not extend deep into counter but did not come off with comet powder. Counter top is fully functional yet and was not new when he moved in. Would that be normal wear after 5 years? This is Wisconsin.

  • Ana Herrera

    We got the permission to paint the property we rented from a landlord, the landlord is not too happy about the quality of the paint job. The truth is doesn’t look that great, there are stains on the baseboards, ceiling and corners. My question is, how much can the landlord deduct from my deposit?
    Thank you in advance

  • Philip

    My tenant recently told me that she was moving out 3 month’s early on her 1-year lease. I said “ok” because I was thinking of selling anyway. But I made it clear that the security deposit would not be used for rent — it would only compensate me for any damages or, if there was no damage, it would be returned to her. There are 3 things that I intend to charge her for: (1) a cleaning fee (this isn’t an issue); (2) two round burn marks on the countertop from a hot pan or pot placed directly on the counter; and (3) the missing microwave handle. Question: if I deduct the $, MUST I use it to repair the countertop and microwave. I’m not charging her enough to replace the counter or the microwave handle; I’m going to leave that to the buyer.

  • Karen Orlando

    My renters signed a lease for 2 people, the rent was set for 2 people. He moved his parents in 2 adults for 4 months. Am I entitled to extra rent for the 4 months? There would be more wear and tear to my home. It is a 2 bedroom, 1 bath.
    Thank you,
    Karen Orlando

  • Bianca

    I rented from a landlord for 2 years. The blinds weren’t new or cleaned when I moved in, and the foundation wasn’t all that good either. Free washer and drier were included in rent but didn’t work the whole time I was there up until she knew I was moving 2 weeks prior to move out. Due to her foundation there were cracks in the walls that turned into holes in my kids closet so I blocked it off because it kept chipping. Now she is trying to deduct that out of my deposit even though I got a professional to write a statement saying it’s her foundation causing that. Can she do that?

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