WHAT IS A SECURITY DEPOSIT & WHEN DO I GET IT BACK?
A security deposit is any prepayment of rent, other than the first full rental payment period established in the lease. It is important to know a security deposit shall not exceed 1.5 times the monthly rent. For example, if a landlord charges $500 a month for rental property, the maximum the landlord may collect as a security deposit is $750 ($500 X 1.5 = $750). All refundable fees or deposit are considered to be part of the security deposit by law. In other cases, a landlord may require in the lease that both the first and last months’ rent be paid before a tenant moves in. If this is the case, the last month’s rent would be considered a security deposit.
Spring has brought the end of the semester, and it is time to move out of your house. You are required to notify your landlord of your forwarding address within 4 days of moving out. At the start of the lease most states require the landlord to inform you of the 4 day notice. Without a forwarding address, the landlord has no duty to make arrangements for returning your security deposit. If the forwarding address is provided within the 4 days, the landlord has 30 days to; return the entire amount of the security deposit by check or money order, or send by mail, a list of damages lawfully assessed against the deposit or money order for the remaining balance of the deposit. The detailed list of damages must also contain the following notice: “You must respond to this notice by mail within 7 days after receipt of same. Otherwise, you will forfeit the amount claimed for in damages. If the landlord fails to return the tenant’s deposit after receiving tenant’s forwarding address or provide a response to your dispute the tenant may be required to file suit.
According to Michigan Law, the security deposit serves the following purposes. First, regulate relationships between landlords and tenants to different rental agreements. Second, regulate the payment, repayment and investment of security deposits. Next, it provides from the beginning and end records of rental units. The fourth purpose of a security deposit is that it provides for termination arrangements comparative to the lease and rental units. Fifth, it provides for legal remedies and provides penalties.” These resolutions are important to know when a landlord-tenant relationship requires a tenant to pay a security deposit.
Always take the time to read what you are signing. Ask for a copy of the lease before you sign and have a lawyer look it over. Spending money to hire a lawyer to review lease will save you money down the road.
Todd Levitt has been representing CMU students for more than 18 years.