Diligent. Dedicated. Prepared.

How well do you understand security deposit rules in Pennsylvania

Becoming a landlord sounds like an attractive prospect on paper. To hear real estate investors talk about this career, it seems like a dream. All you need to do is secure financing to purchase a property and then sit back and collect a rent check, right? Many people who venture into the rental real estate world find themselves facing a rude awakening about the reality of landlord responsibilities.

Owning a property and renting it to tenants can be a great source of income, but it is also a source of responsibility. You need to maintain the structure, as well as the critical appliances and fixtures, like the furnace. When tenants move out, you will need to clean and make repairs, which can become quite costly. Most landlords offset the expenses related to tenant damage by charging a security deposit. However, if you don’t understand state law about security deposits, you could end up in a difficult position.

The state limits how much of a deposit you can require

In order to ensure that people of all incomes and backgrounds can secure a place to live, Pennsylvania law places specific limits on security deposits. In general, you can only charge up to a maximum of two months rent for the first year someone occupies a rental unit you own. If your tenant stays for a second or subsequent years, only one month’s rent can be held as a security deposit.

If you hold those funds for more than two years, the security deposit must go into a state or federally-regulated escrow account and you must provide your tenants the name of the bank where you made the deposit. It is also important to realize that your tenant should receive interest on the amount after you’ve held the deposit for two years.

How do you deduct from or return a security deposit?

State law also places limits on how landlords may use or dispose of security deposit funds. Generally speaking, you should require tenants to fill out an inventory about the condition of each area of the rental unit. This allows tenants to create a formal record of any pre-existing damages. After the tenant moves out, the landlord then has 30 days to inspect the unit and provide a written list of damages and the costs associated with those damages. The tenant should receive any amount that remains.

Landlords who fail to provide a list of damages within 30 days will forfeit their right to claim those damages from the security deposit. More importantly, if you fail to return the security deposit within 30 days, the tenants can take you to court for as much as double the security deposit plus interest.


FindLaw Network
Super Lawyers
The National Trial Lawyers | Top 100 Trial Lawyers