Security Deposit

Glossary

A security deposit is refundable money held to cover unpaid rent or damage, subject to state and local rules.

Definition

A security deposit is money a resident pays to a landlord or property manager as protection against unpaid rent, lease violations, or damage beyond normal wear and tear. It is typically refundable after move-out, minus lawful deductions. Rules for how much can be collected, how funds must be held, what can be deducted, and when the balance must be returned vary by state and local law.

Example

After a resident moves out, the property team completes a move-out inspection, documents damage beyond normal wear and tear, applies approved repair charges, and sends the resident a deposit accounting statement with any refund due.

Why It Matters?

Security deposits affect resident trust, move-in affordability, compliance risk, and back-office workload. For operations leaders, consistent deposit collection, documentation, deduction, and refund processes help reduce disputes, support fair treatment across communities, and keep teams aligned with jurisdiction-specific rules.

‹ Section 8

Security deposit accounting ›