A security deposit is money given to a landlord for the secure performance of a rental agreement or to compensate for possible loss or damages. A security deposit is paid to the landlord prior to or as part of the first month's rent. A security deposit cannot exceed more than one and one-half times the monthly rent that the tenant(s) pay. In return for the security deposit, the landlord must place the deposit in a bank account that earns interest and provide that information about the deposit to the tenant(s) within 30 days of receiving the deposit. When the tenant(s) decide to move out, the tenants may receive the full deposit back as long as there were no damages or past rents due. If this is the case, the money that is owed to the landlord would be taken out of their deposit.

Since the Rent Security Deposit Act has been in effect (January 1, 2004), certain changes should be noted. According to the new law, the landlord must inform the tenant(s) within 30 days about the account that the deposit is in and how much interest is earned. All the interest that is earned belongs to the tenant so the landlord must either give the interest to the tenant(s) or use it to pay for their rent due. Any changes made while the tenant(s) are residing, whether they be a bank transfer or if a new landlord is in charge, must be communicated to the tenant(s) within 30 days of going into effect. If there is any time that the landlord does not abide by these requirements, whether it be not putting the deposit in the proper account or not notifying the tenants as required, the tenants can use the deposit to pay their rent as long as they give a written notice to the landlord ahead of time.

Even with the new law acting in their favor, tenant(s) are still advised to take precautions to guarantee their deposits. When moving in, it is advised that the tenant(s) take photos and have a walk through of the property with the landlord so that a proper inspection of the place is done and agreed upon by both parties. When the tenant(s) are planning on moving out, it is advised that they clean the residence and once again take photos and have a walk through with the landlord to check for damages. Once everything is agreed upon, both parties should have signed copies of the agreement. Lastly, the tenant(s) should give the landlord their new address. Following all these procedures should result in the security deposit being safely returned.