Before moving in, a tenant pays the landlord an extra sum that will be held against possible damage or unpaid rent. That sum is the security deposit. It is not an extra month of rent; it is collateral.

State laws regulate maximum amounts, required notices, allowable deductions, and deadlines for return. Landlords must typically keep deposits in appropriate accounts and provide itemized statements when making deductions. Normal wear and tear cannot be charged against the deposit.

Disputes over security deposits are among the most common landlord-tenant conflicts. Clear move-in and move-out inspections with photographs protect both parties. Tenants who leave the property clean and undamaged and fulfill the lease usually receive their deposits back. Landlords who follow the statutes avoid penalties for wrongful withholding.

• Funds held to cover damage or unpaid rent
• Regulated by state law on amount and return
• Cannot be used for normal wear and tear
• Common source of end-of-tenancy disputes