What is a security deposit?

A security deposit is defined as a sum of money held to cover potential damages to the property during a tenant’s lease. This deposit serves as a financial safeguard for the property owner, ensuring they have funds available to address any damages that exceed normal wear and tear when the tenant moves out. The security deposit is typically collected at the beginning of the rental agreement and can be returned to the tenant, minus any deductions for repairs, after the lease term ends and the property is inspected.

It's important to note that a security deposit is not an advance payment for rent, a fee associated with terminating a lease, or a charge for maintenance. These options each serve different purposes and do not fulfill the role that a security deposit plays in a rental agreement. The primary function of a security deposit is to provide a financial remedy for property owners in case of tenant-related damages.