Under the Pennsylvania landlord-tenant laws, landlords have a right to ask for a security deposit. The security deposit acts as a safety net, ensuring compensation for any losses they might incur as a result of a tenant’s negligent actions.
Examples of negligent actions a tenant can commit include:
- Failing to pay rent
- Breaking the lease for reasons that are not legally justified
- Causing excessive property damage
- Failing to clear utility bills when moving out
In such cases, you have a right to withhold part or all of your tenant’s deposit to minimize your losses.
Whether you’re just starting out or are a seasoned landlord looking to learn more, here are the basics of the Pennsylvania security deposit laws.
Maximum Security Deposit
Pennsylvania landlords cannot charge whatever amount of security deposit they wish. The maximum you can charge as a security deposit is capped based on the length of tenancy.
During the first year of the lease agreement, the maximum you can collect is capped at the equivalent of two months’ rent. During the second year of the lease and any year after that, you must only ask for a maximum of one month’s rent as a security deposit. And, for tenants that have lived on your property for at least five years, you cannot increase the security deposit amount even if the rent goes up.
Additional Pet Deposit
Pennsylvania law allows landlords to ask for an additional pet deposit. You can use the additional deposit to cover any pet-related damage that may occur during the tenancy.
Disabled tenants are, however, exempt from paying a pet deposit. According to the Fair Housing Act, disabled people are entitled to full and equal access to housing. Thus, requiring tenants to pay extra for their service animals would amount to discrimination.
You are allowed to hold the tenant liable for any damage their service animal causes, though.
Pennsylvania landlords are allowed to charge a cleaning fee. However, this must only be a necessary step to bring the unit to the same state it was when the tenant was moving in. Beyond that, you can only charge the tenant a cleaning fee against their security deposit if the rental agreement allows it.
Rules for Storing a Tenant’s Security Deposit
In Pennsylvania, tenants have a right to have their security deposit stored in either of two ways.
The first option you have is storing the deposit in an escrow account. If you choose to go with this option, then you must adhere to the following requirements:
- The security deposit must be at least $100
- The financial institution must be regulated by either the Pennsylvania Department of Banking, the Federal Home Loan Bank Board, or the Federal Reserve Board
- The account can either be interest-bearing or not
The second option you have to store your tenant’s deposit is to post a guarantee bond for the amount of security deposit. The bonding company you choose must be authorized to do business in Pennsylvania.
The other option is to store your tenant’s deposit in an interest-accruing account. However, you must only use this option for tenants that start their third year, or 25th month. You must also pay them the accrued interest annually, less the 1% management fee that you can deduct.
Right to Notice After Receipt
Do Pennsylvania tenants have a right to be notified after their landlord receives their security deposit? Yes! Once you receive your tenant’s deposit and store it through either of the aforementioned ways, you must notify your tenant in writing of the same. In the notice, you must include the following details:
- The name and address of the bank.
- The amount of security deposit you have deposited.
Reasons to Keep a Tenant’s Security Deposit
In Pennsylvania, you may be able to keep all or a portion of your tenant’s deposit for any of the following reasons:
- If the tenant stops paying rent
- When damage exceeds normal wear and tear
- Other breaches of the lease agreement, such as in the case of property abandonment
Normal Wear & Tear vs. Damage
Normal wear and tear is the deterioration that occurs naturally as a result of the tenant using the property as intended. These are minor issues that include lightly scratched glass, stained bathroom fixtures, loose door handles, and gently worn carpets.
Damage exceeding normal wear and tear, on the other hand, impacts the unit’s usefulness and value. Examples include broken windows, missing fixtures, smashed bathroom mirrors, and broken tiles.
Returning a Tenant’s Security Deposit
If you haven’t deductions to the deposit, you must return it to the tenant within a period of 30 days after they move out.
If you’ve made deductions, you must still return the remaining portion of the deposit within 30 days of the tenant moving out. If you fail to return it within that window, you’ll forfeit your right to make any deductions. Furthermore, you may be liable for paying the tenant up to double the amount of the security deposit.
With deductions, you must provide your tenant with an itemized list of all damages plus their approximate cost of repair. If you fail to do this, you’ll lose your right to make any appropriate deductions to the deposit.
Note that tenants have the responsibility of providing their landlord with a forwarding address.
Security Deposit as Last Month’s Rent
Usually, a tenant isn’t allowed to do so under the state’s security deposit laws. The only exception to this is if there is an agreement between the landlord and tenant to do so.
In addition to understanding and following the state’s security deposit laws, landlords are also required to follow the legal eviction process, landlord-tenant laws, leasing policies, and other rental regulations.
If you would like help making sense of these legal responsibilities or managing your rentals contact the team at Keyrenter Property Management BuxMont today!
Disclaimer: This blog isn’t a substitute for professional legal advice. Laws change and this blog may not be updated at the time of your reading. If you have any questions regarding this content please get in touch with a licensed attorney.