How Large Can a Security Deposit Be?
First, the Act sets limits on the amount that a landlord can hold as a security deposit. For the first year of a residential lease, the landlord can hold no more than two (2) times the monthly rent. At the end of the first year, the amount is reduced to one (1) month's rent. After the end of the second year, any amount still being held by the landlord, must be placed in an interest bearing account and that interest must be paid to the tenant (minus 1% that can be held by the landlord).
How Much of The Security Deposit Can Be Held for Damages?
At the end of the rental relationship the landlord is required to provide the tenant with a list of the damages and return the security deposit, less the cost for repairs. The amount held by the landlord can only be for the actual damages, not just normal wear and tear.
When Should The Security Deposit Be Returned?
The timing for the return of the security deposit is dictated by a thirty (30) day clock that starts ticking when the tenant provides the landlord with his/her new address (in writing). It is imperative that the landlord takes this required action within thirty (30) days. Failure to do so will result in the landlord being liable to the tenant for two (2) times the full deposit and will be precluded from making any claims for damages to the property, regardless of the extent and nature of the actual damages.
In summary, it is always important to treat security deposits with care and be sure to follow all of the rules. Failure to do so can be costly. Whenever in doubt, seek the help of an attorney.