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Move-In Deposits and Advances

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It is the rare landlord that does not require some amount of money for a security deposit from a tenant to ensure the tenant does not damage the property. Additionally, a landlord may ask for first and last month's rent. Both amounts are due at the time the tenant signs the lease agreement.

Advance Rent

Landlords usually require some amount of rent in advance for several reasons. For example, the tenant who pays advance rent will not suddenly change her mind about moving in and leave the landlord with a vacant apartment. Additionally, advance rent keeps the tenant from living rent-free for a month if she decides to move out after 30 days; the landlord has a payment for the first month of occupation. Lastly, advance rentals are a large out-of-pocket expense to a tenant; the tenant who can afford to pay is probably going to be a tenant that does not break the lease and pays her rent on time.

The requirement for advance rent is part of the lease agreement. At the end of the lease, the advance payments are returned to the tenant or applied to the last month's rent. If the tenant breaks the lease, the agreement typically allows the landlord to keep the advance rent money.

The advance rent my landlord required was a very large amount of money. Can I require him to put it in an interest-bearing account?

That depends on whether state or local law requires it. Generally, a landlord must keep advance rentals and security deposits in a separate noninterest-bearing account.

Is there a limit to how much advance rent a landlord can require?

Some laws limit the amount to a certain percentage of one month's rent. For instance, a law may prohibit the landlord from collecting more than 150 percent of a month's rent as an advance rental payment.

Security Deposits

The difference between rent and a security deposit is that the landlord keeps rent and returns security deposits. The difference is important because laws require the landlord to handle security deposits in a certain manner.

Landlords typically require tenants to pay a security deposit to ensure that the tenant will comply with certain provisions of the lease concerning damage to the premises and clean-up at the end of the lease. If the tenant complies, the deposit must be returned at the end of the lease.

A deposit that can be withheld for late rent or nonpayment of rent is considered to not be just a security deposit. In such situations, the security deposit is also advance rent, and the landlord does not have to return the money if the lease is broken.

TIP: When you sign the lease, ask the landlord what she considers to be normal "wear and tear." If she cannot give you some examples, she may be the type of landlord who tries to withhold your security deposit although the premises were not actually damaged. You might want to consider renting where the landlord has a better understanding of the concept of "normal wear and tear."

Why do I have to pay a security deposit?

Landlords commonly require security deposits to ensure that the tenant complies with certain terms in the lease agreement. For example, if the tenant is required to clean out all appliances under the lease and does not, the landlord can deduct the cost of hiring someone to clean from the security deposit.

TIP: When you pay your security deposit, get a receipt or have the landlord note the amount paid on the original lease and on your copy. Standard lease forms have a blank for the landlord to fill in the amount of the security deposit.

Is there a maximum amount a landlord can demand for a security deposit?

Some states have laws setting a limit on the amount of security deposits; others have no limit. As an example, California law requires security deposits to equal no more than 2 months' rent on unfurnished rentals.

But remember, security deposits are different from advance rent. So although the California law has a limit on security deposits, it permits a landlord to demand 6 months rent in advance where a lease is 6 months or longer.

What happens to the money I paid as a security deposit?

Depending on the law in your state,

  • there may be no requirements on the landlord,
  • the landlord may be required to put security deposits in an escrow account, or
  • the law can direct the landlord to place security deposits in an interest-bearing account for the benefit of the tenant.

I be required to pay a nonrefundable cleaning fee when I sign a lease?

Yes. In addition to a security deposit, the landlord may require a nonrefundable cleaning fee. The amount is usually less than $100.

Even if you make a nonrefundable cleaning fee, the landlord can still deduct expenses for "special" cleaning from your security deposit at the end of the lease. Special cleaning is more than that needed for normal wear and tear. For example, if you were a heavy smoker in a furnished apartment, the upholstery and drapes may require special cleaning to remove the odor.

Pet Deposits and Fees

Most landlords are not fond of cats, dogs and other animals living in their rental properties. You may be required to pay a large deposit to have your pet on the premises. A $500 pet deposit, per pet, is not unusual. The deposit assures the landlord that she will be able to cover the cost of cleaning and repairing any damage the pet inflicts on the property. Typically, some portion of the deposit will be refunded to the tenant if the pet did not damage the premises. The lease agreement may set out an amount that will not be refunded, in order to cover the expense of shampooing rugs and ensuring any trace of fleas are removed from the property.

In addition to a pet security deposit, the landlord may add an additional amount to the pet owner's monthly rent. This amount does not have to be applied toward cleaning costs or repairing any damage owing to the pet. It is simply an added charge to the tenant, assessed for the pleasure of keeping a pet on the premises. Alternatively, a lump sum "pet fee" may be imposed in place of an increased rent amount.

Is there a limit to the amount a landlord can require for a pet deposit?

No. Generally, pet deposits (if pets are allowed at all) are at the discretion of the landlord. Obviously, an exorbitant deposit will keep away pet owners, and some landlords keep the deposit high for this very reason. You can attempt to negotiate a lower deposit. Also, it might help to provide references from a former landlord concerning your pet's behavior.

Laws in some states place a limit on the total amount of all advance fees and deposits that a landlord can collect for a pet deposit. For example, California law limits all fees and deposits, including pet deposits, to 2 months' rent in an unfurnished apartment.

Sidebar: A service animal must be allowed to reside with the disabled tenant; however, the pet deposit can remain the same as it is for any pet. However, if there is a "no pet" policy, then the pet deposit should be nominal as the law requires the landlord to accept the service animal.

Is my pet deposit refundable?

Although the term "deposit" indicates that the amount paid may be refundable, some landlords retain the pet deposit at the end of the lease. Before you sign your lease, ask the landlord if he treats the pet deposit as a security deposit (with amounts subtracted for damage) or a fee. If the landlord says all or part of the pet deposit is refundable at the end of the lease term, add that provision to the lease if it is not already included.

My landlord is charging me a pet deposit, but he also wants to add $25 to the monthly rent for cleaning because I have a cat. Is this legal?

Yes. The landlord can charge the amount of rent he believes is fair. You always have the option of not signing the lease and renting somewhere else.

TIP: If you do not keep the cat for the full length of the lease, you are still obligated to pay the extra $25 per month under the lease terms. Ask the landlord to include a provision that the extra amount will be waived if the cat is no longer living with you.

My roommate has a dog and paid the pet deposit that our landlord required. If the dog damages the apartment so that repair costs exceed the pet deposit, will part of my security deposit be kept?

Yes. Although the dog is your roommate's, you are jointly responsible for all damage to the apartment. You need to come to an agreement with your roommate that she will reimburse you for any damage caused by her pet that is withheld from your security deposit. Alternatively, you can ask her to pay you a pet deposit, which you will return once you get your security deposit back.