Real Estate Continuing Education

Security Deposits

A common source of landlord and tenant disputes is over the security deposit. A security deposit is a payment required by a landlord to ensure that a tenant pays the rent and keeps the rental unit in good condition. If the tenant damages the property or leaves owing rent, the landlord can use the security deposit to cover what the tenant owes.

Landlords usually ask for a security deposit at the time the lease is signed. The maximum amount that an Arizona landlord can charge a tenant for a security deposit is 1 and 1/2 month's rent. So in otherwords, if a tenant rents a home for $1000 a month, the most the landlord could charge for a security deposit is $1500. The lease should clearly state the amount any deposits, and whether these deposits are refundable or nonrefundable.

An important point to remember is that any amount that is refundable, no matter what the landlord calls it (pet deposit, cleaning deposit, etc.) is "security" and cannot exceed 1 and ½ times rent. If any fees or deposits are nonrefundable, their purpose must fees must be stated in the lease.

While a tenant is liable for any damage that occurs during the lease, they are not liable for normal "wear and tear." For instance, if a tenant moves out and the carpet is just a bit dirty with no major stains or rips, the landlord should not charge the tenant for the carpet cleaning. It is considered normal "wear or tear", not damage. If there are cigarette burns, pet urine or major stains in the carpet, it will probably be considered damage.

Tenants should always do a detailed walk-through inspection with the landlord or property manager before moving in. The tenant should use a pre-move in checklist and indicate anything that is damaged or not in perfect condition. For instance, a crack in a tile should be noted so that the landlord can't blame the tenant for breaking the tile later. It is also a good idea to document this inspection by taking pictures or videotaping it.

Once the lease has been terminated, another walk-through inspection should be conducted. The landlord should indicate which items the tenant will be held responsible for, or any additional cleaning that must be done. Both parties should have the pre-move in checklist handy to resolve any disputes about damage that was done before the tenant moved in.

Arizona landlords have 14 days, excluding Saturdays, Sundays or other legal holidays, after a tenant vacates a property to either:

1) Return the security deposit in full to tenant

2) Deliver to tenant an itemized written notice of the damages or unpaid rent to which the deposit has been applied, along with any remaining amount of the security deposit

If a tenant disagrees with the distribution of a security deposit, the tenant should write the landlord a letter asking for security deposit or the itemized list of the items to which it has been applied. If the landlord does not comply, the tenant can file a lawsuit in Small Claims Court to recover money due to the tenant along with damages in an amount equal to twice the amount wrongfully withheld.

Both tenants and landlords should read the Arizona Residential Landlord and Tenant Act to be well informed on the laws regarding security deposits and other leasing issues.