A security deposit is a certain amount of money that is paid by a lessee (or a tenant) to his landlord when he moves into the leased premises like an apartment, a condominium unit, room, or commercial space. It is called a security because the landlord can use this money if in case the lessee damages the leased premises. The amount of the security deposit is usually equivalent to a month’s rent unless another amount is specified.
THE GENERAL RULE
In lease contracts, the general rule is that a landlord cannot refuse to return the security deposit paid by the lessee. This is because the money is only for purposes of security. The landlord does not, in any way, own the money. He cannot place it in his account and he must give a receipt for receiving the security deposit.
However, as an exception, the landlord can refuse to return the security paid by the lessee. This is just proper because when damage is made to the leased premises, the landlord is not expected to use his money to repair such damaged which he did not cause.
CASES WHEN REFUSAL IS PROPER
When can a landlord refuse to return a security deposit? There are cases when such refusal is proper:
1. When the leased premises is damaged
A damaged leased premise is one of the cases when a landlord can refuse to return a security deposit. He has the right to keep the security deposit because he can do the repairs and pay for the same using the money. In effect, the landlord made the repairs at the expense of the lessee.
Some of the items that the landlord can deduct from the security deposit charges for unpaid taxes for which the lessee is responsible, and amounts used to make necessary repairs.
2. When the lessee owes rent
Another case when a landlord can refuse to return a security deposit is when the lessee has unpaid rents. Like the abovementioned situation, the landlord can use the money to pay the unpaid rents. However, the landlord cannot get what is left after deducting the unpaid rents.
3. When the lessee has not paid bills for utility expenses
One of the most common cases, when a landlord can refuse to return a security deposit, is when the lessee did not pay his utility bills. The landlord can use the security deposit to pay for the same. However, if the security deposit is not enough to pay for all the expenses, the landlord can ask the lessee to shoulder the remaining balance.
4. When the lessee has violated the lease contract
The landlord can also refuse to return the security deposit when the lessee has violated the lease contract. However, this can be done only when the contract provides it, and the same should only be for a short period of time.
When can a landlord refuse to return a security deposit? Generally, he can do so when the lessee has unpaid obligations. Both the landlord and the lessee must know these cases to avoid litigation.