Security deposits
General information, not legal or tax advice. Landlord-tenant and tax rules vary by state, county, and city and change often. Confirm against current statute or a licensed professional in the relevant jurisdiction before acting.
For renters
Residential
Almost every state sets a fixed deadline after you vacate — most commonly 14 to 30 days, occasionally up to 45 or 60. Many states also require the landlord to include an itemized statement of any deductions with whatever they return. Florida, for example, allows 15 days when there are no deductions and 30 when there are; Texas uses 30 days; several states are shorter.
Protect yourself: give a forwarding address in writing, document the unit at move-out with dated photos or video, and keep proof of when you returned the keys. If the landlord misses the deadline or withholds in bad faith, many states let you recover a penalty — sometimes two to three times the deposit — in small-claims court.
For landlords
Residential
Generally you can deduct for unpaid rent, repair of damage beyond normal wear and tear, and in many states cleaning needed to return the unit to its move-in condition. You cannot deduct for ordinary aging — faded paint, lightly worn carpet, small nail holes. Most states require a written, itemized statement delivered within a set deadline, and some require receipts or estimates to back it up.
A disputed deduction almost always turns on one question: can you prove the condition changed while the tenant lived there? Dated before/after photos are the evidence that wins. Collabrio keeps move-in and move-out condition photos organized by date, per unit, so a deduction holds up if it ever reaches small-claims court.
For landlords
Residential
It depends entirely on the state. Several cap deposits at one to two months' rent — New York limits all deposits to one month, and California has moved to a one-month cap with limited exceptions for small landlords. Others, such as Texas, set no statutory cap and leave it to the market. A common practice where uncapped is one to two months' rent.
Wherever you operate, state the deposit amount clearly on the listing, the application, and the lease so there's no dispute later. Check city ordinances too — some localities are stricter than their state.
For landlords
Residential
In some states and cities, yes. A number of jurisdictions require you to hold the deposit in a separate — sometimes interest-bearing — account and pay the tenant the accrued interest annually or at move-out. Parts of Illinois, New Jersey, and cities like Chicago have versions of this rule; many states have no interest requirement at all.
Because this is governed by both state law and local ordinance, confirm the rule for the property's exact location, and keep the deposit segregated from operating funds either way — commingling is itself a violation in several states.
For renters
Residential
Start by requesting the itemized deduction statement in writing — most states require the landlord to provide one. Compare each charge against the normal-wear standard: faded paint, lightly worn carpet, and small nail holes are not chargeable; large holes, pet stains, and burns usually are.
If charges look wrong, send a written demand letter that cites your state's deposit statute and any penalty for wrongful withholding, and give a deadline. If that fails, small-claims court is the usual venue — bring the lease, your dated move-in and move-out photos, and proof you gave a forwarding address. Many states award you extra damages if the landlord withheld in bad faith.
For landlords
Commercial
Commercial deposits are largely uncapped and negotiable, so the real question is credit risk. A cash deposit is simple but ties up the tenant's capital and exposes them to your insolvency. A letter of credit (LOC) protects the landlord — you can draw on it at default and it generally survives a tenant bankruptcy better than cash held in your account — but the tenant pays bank fees to maintain it.
Strong-credit tenants often negotiate a burn-down provision that reduces the deposit or LOC over the term as they establish payment history. Match the security to the tenant's covenant strength and the cost of re-tenanting the space.
Less guesswork, one system of record
Collabrio keeps the dated photos, ledgers, leases, and audit trail
that turn these questions into a five-minute lookup.
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