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HOW IT WORKS
How it works
A security deposit is an amount of money given to the Landlord by the Tenant that can be used by the Landlord for several reasons, including: (a) to make up for a Tenant's failure to pay rent, (b) to make up for rent if a Tenant leaves the property before the end of the lease term, or (c) for necessary repairs and cleaning. Most states limit the amount that can be collected to one or two months' rent. This cap may differ depending on the type of lease (more can be collected for a long-term lease, where the property is furnished, or where the Tenant will have a pet, etc.).
A security deposit receipt is an important document for landlords in their rental management. Each state has specific laws about the maintenance, the use and the return of security deposits. While some states may not require that a tenant receive a receipt, other states can require not only a receipt but also that the tenant is informed of the bank name and address where their security deposit is being held.
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