Landlord Question and Answer Forum

If a proposed tenant withdraws his application the day before the lease is to be signed, do I have to return the security deposit which reserved this unit for over a week until they moved in and signed the lease?

It is a common misconception that the security deposit is an advance on rent. Contrary to popular belief, the security deposit cannot be used by the tenant to pay the last month's rent and, absent any other evidence in a lease, the security deposit will not be judged to be advanced rent. The security deposit may be used to setoff any damage done to rental property (except for ordinary wear and tear) and as an additional assurance that the tenant will perform the duties contained in the lease. If you have specified that the deposit given was in fact a security deposit, then you probably cannot keep it. BUT if you called it a deposit to hold the property; then you may be able to use it. In the future, when taking an application, always note that any deposit taken is non-refundable UNLESS the tenant is denied by the landlord.

Posted by Denise S, PA on Friday, August 14, 2009