As a landlord, it’s in your best interest to require tenants to pay a security deposit when first moving in. The deposit can help you offset things like unpaid rent, excessive cleaning costs, and property damage.
However, when collecting the deposit, you must abide by certain rules and landlord-tenant laws. By following these rules, you’ll know how much you can charge, how to store the deposit, and when to return it, among other things.
A Guide to Pennsylvania Security Deposit Law
Here are some elements of the Pennsylvania’s security deposit laws that landlords should know:
Security Deposit Limit
There is a limit to how much security deposit you can charge tenants in Pennsylvania. The limit varies depending on how long a tenancy is.
For tenancies lasting one year, property owners can collect a security deposit equivalent to no more than 2X the monthly rent. For tenancies that enter the second year, the most landlords can collect as a security deposit must not exceed the equivalent of one month’s rent. For tenancies that stretch for at least five years, a landlord must not require any deposit from the tenant.
Note that you need to charge and fair and uniform security deposit amount for all tenants to ensure adherence to Fair Housing Laws.
Security Deposit Storage
Pennsylvania security deposit laws also dictate how landlords must store their tenants’ security deposits. A landlord has two options to consider:
- Store the security deposit in an escrow account. The security deposit must be at least $100 and the financial institution must be regulated by either the Federal Home Loan Bank, Federal Reserve Board, the Pennsylvania Department of Banking, or the Comptroller of the Currency. The account may or may not be interest-bearing.
- Post a guarantee for the amount of the security deposit. The bonding company issuing the bond must have authorization to operate within Pennsylvania.
Written Notice Requirements
As a landlord collecting a security deposit, you must notify the tenant upon receipt of their deposit. This must be in writing and must state the name and address of the bank, as well as the amount deposited.
Security Deposit Deductions
A landlord has a right to make deductions from a tenant's deposit for allowable reasons. The reasons include:
- Unpaid Rent - If a tenant defaults on their rent payments, the landlord can recover their losses by making appropriate deductions on their security deposit.
- Lease Violations - Examples of rental agreement violations include missed rent payments, pet-related damage, and excessive mess. A landlord can deduct the costs of fixing these violations from the renter’s security deposit.
- Damage Exceeding Wear and Tear - Examples include holes in walls, broken windows or doors, stains and burns on carpets, or unauthorized property alterations.
Normal Wear and Tear Vs. Damage
In Pennsylvania, wear and tear refers to the normal deterioration a rental unit undergoes over time. Examples include:
- Faded flooring
- Gently worn carpets
- Lightly dirtied grout
- Loose door handles
- Stained bath fixtures
As a Pennsylvania landlord, you cannot penalize a tenant for such types of damages or make deductions from the security deposit. Damage, on the other hand, results from a tenant’s negligence or carelessness. You can, under state law, penalize a tenant for the following types of damage if they move out without fixing them:
- Missing fixtures
- A smashed bathroom mirror
- Broken windows
- A missing bathroom tile
- Torn carpets
Walk-Through Inspections
The walk-through inspection allows the landlord to assess the property's condition. The goal is to compare the property’s move-in and move-out conditions. If there is any damage, the tenant will have to do the repairs before moving out. If they don’t, the residential landlord may make appropriate deductions on the tenant’s security deposit. That said, walk-through inspections are not required under Pennsylvania security deposit laws.
Security Deposit Return
A landlord has 30 days after a tenant has moved out to return their security deposit, or whatever portion remains. If the landlord fails to do so, they may be liable to pay the tenant up to 2X the wrongfully withheld amount.
If you’ll be using part or all of the tenant’s security deposit, you must provide the tenant with an itemized list of deductions. The tenant is responsible for providing the landlord with a forwarding address. If they don’t, then they forfeit the right to the return of their security deposit.
Frequently Asked Questions on Pennsylvania Security Deposit Laws
Can a landlord charge for carpet replacement in Pennsylvania?
If the carpet is damaged beyond normal wear and tear, a landlord can charge the tenant for the cost of replacing it. Examples of excessive damage on a carpet are visible stains, rips, or major discoloration.
Can a landlord charge for nail holes?
A landlord can charge a tenant for any nail holes that cause wall damage. For instance, large nail holes, or multiple nail holes.
Can a landlord charge for the cost of professional cleaning services?
Most leases require tenants to leave their rented premises in a reasonable state of cleanliness. If the tenant doesn’t, the landlord can charge a cleaning fee.
Can the landlord charge for painting?
A landlord can charge for painting if the tenant causes excessive damage. For instance, repainting the unit without permission. A landlord can’t, however, charge the tenant for damage resulting from normal wear and tear. Such as, fading paint due to sunlight, or minor scrapes from daily use.
Can a tenant use the security deposit as last month’s rent?
No state law forbids tenants from doing this. Landlords can, however, include a term in the lease that expressly allows or prohibits tenants from using their security deposits as last month’s rent.
Bottom Line
To be a successful landlord in Pennsylvania, you need to strictly follow the state’s landlord-tenant laws. If you need expert help, then look no further than Lone Eagle Management - Philadelphia. Our focus is providing high-quality property management services to property owners in Philadelphia and the surrounding areas.
Disclaimer: Please note that the information provided in this blog is intended for general guidance and should not be considered as a replacement for professional legal advice. It is important to be aware that laws pertaining to property management may change, rendering this information outdated by the time you read it.
