Security Deposit Laws in Pennsylvania

In Pennsylvania, landlords are permitted to collect security deposits from tenants if they follow certain rules regarding the amount, storage and return of the funds. Security deposits are generally intended to cover property damage caused by the tenant or unpaid rent when the tenant moves out. The landlord should include details surrounding the security deposit in the lease agreement and should be prepared to provide documentation for where the funds have been held and how they are returned.

How much should a security deposit be?

The total amount a landlord can charge for a security deposit will depend upon the length of tenancy. If a tenant’s lease is for one year, Pennsylvania allows landlords to charge up to 2 months’ rent as a security deposit. Once the lease has moved into the second year, landlords can only charge 1 month’s rent and must return anything over that amount that may have been previously collected. Practically speaking, this means a landlord should return 1 month’s rent to the tenant at the 1 year mark if 2 months’ rent was required up front.

If rent is raised, the landlord can raise the security deposit within the limits stated above. If the lease has been in place for 5 years or more, the landlord cannot raise the security deposit.

How are security deposits stored?

Under Pennsylvania law, landlords must store security deposits in one of three ways.

1. They may store the deposit in an escrow account.
2. Landlords may also be able to post the security deposit as a bond if the bonding company is authorized in Pennsylvania.
3. For leases that are renewed for more than 2 years, the security deposit must be placed in an interest-bearing account. Tenants are entitled to receive any interest accrued, and landlords may be entitled to 1% of the interest for administrative costs.

Tenants are entitled to receive a Notice of Receipt when a landlord stores a security deposit in any of the above ways. This notice should include the name and address of the bank or bonding company, and the amount that has been deposited.

Returning Security Deposits

As a tenant, when your lease ends, you should give your landlord written notice with your new address, a valid P.O. box, or the address of a trusted relative or friend. You can either send the notice by certified mail so you can receive a return receipt, or you can give your new address to the landlord in person (but it’s best to have a witness or some confirmation of receipt).

Landlords have 30 days after the end of a lease to either return the security deposit or give a written list of damages and the remainder of the deposit. If there is damage that exceeds your security deposit, or if you have unpaid back rent that meets or exceeds your security deposit, your landlord can keep the entire security deposit and request further payment from you to cover what’s left. You can dispute damage claims. However, the landlord may be excused from this requirement if they are not given the new address in writing as discussed above.

In the event that your landlord fails to provide you with your security deposit within 30 days or fails to provide you with a written list of damages, they lose the right to keep your security deposit or sue you for any property damage. You can also bring a lawsuit against your landlord if you have a problem receiving your security deposit from them.

What can landlords deduct from security deposits?

As a landlord, you have the right to deduct certain things from your tenant’s security deposit. This can include:

• Excess Damage—Tenants are not responsible for normal wear and tear. This refers to any deterioration you’d expect to see while someone is living in a property. Chipped paint, small scratches and faded carpets fall under this category. You can deduct for any damage that exceeds normal wear and tear. Examples include large holes, broken windows, missing fixtures, or other similar damage.
• Cleaning Fees—Tenants can be required in the lease to leave a rental property in the same condition in which they found it (except for normal wear and tear). If your rental property requires professional cleaning services after a tenant has left because of the tenant’s inadequate cleaning, you can deduct this cost from their security deposit. But you will need to be prepared to show that the cleaning job done by the tenants was truly inadequate.
• Unpaid Rent & Utilities—If your tenant fails to pay rent and is not withholding it for a justifiable reason, you may be entitled to some or all of the security deposit. This can also be true of unpaid utility bills that are in the tenant’s name.
• Lease Violations—If your tenant has violated the lease in another way, you may be entitled to some or all of the security deposit—but only to the degree you can show actual damages.

Does a security deposit cover the last month’s rent?

Generally, no. Security deposits are not meant to cover the last month’s rent. It can, however, cover it if both the landlord and tenant have agreed to this in the lease agreement.

What are the penalties for failing to return a security deposit?

The landlord can be held liable for double the value of an unreturned security deposit plus attorneys’ fees necessitated in pursuing the deposit’s return. For this reason, it’s best for a landlord to be very sure they’re entitled to the funds before withholding them, as the cost for miscalculating or misunderstanding the law can be high.

Contact Cornerstone Law Firm for security deposit help.

The attorneys at Cornerstone Law Firm have represented both landlords and tenants in disputes over security deposits. If you need legal help with a security deposit, give us a call. We’d be happy to set up a consultation and discuss your options.