A security deposit is money that is given to a landlord, lender, or seller of a home or apartment as proof of intent to move in and care for the domicile. Security deposits can either be refundable or nonrefundable, depending on the terms of the transaction. A security deposit is intended as a measure of security for the recipient, and can also be used to pay for damages or lost property.
Security deposits serve as an intangible measure of security, or as a means of tangible security in the event of damages or lost property. It serves as a means to fix or replace something in a rental unit that was damaged, lost, or stolen by the renter.
Security deposits typically must be paid prior to moving in and applicable laws dictate how security deposits are applied once needed. Security deposits are typically refunded upon departure if the property was left in "reasonably" good shape - to the point of normal depreciation.
HOW SECURITY DEPOSIT WORKS
How a Security Deposit Works Security deposits are paid before moving in or taking possession of the property and these deposits are typically the same amount as the monthly rent. A security deposit might be used toward any repairs or replacement of appliances in a rental unit if the damages resulted from the actions of the renter.
For example, if a renter breaks a window or causes permanent damage to the floors, walls or infrastructure of the property, then the landlord can use the security deposit toward repairs. Typically, if the property is in good condition and without the need for repair when the renter moves out, the security deposit may/will be refunded to them.
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