Becoming a landlord is a huge risk because you have to rely on tenants to fund your investments. One way to protect yourself from bad tenants is by requiring security deposits.
In Philadelphia, PA, there are laws regarding the protection of security deposits. Before accepting a security deposit, there are things you need to know.
Keep reading to learn them.
Philadelphia Security Deposit Laws
To protect security deposits as a landlord, you need to know the laws surrounding them in the state of Pennsylvania.
There is no minimum amount for security deposits, but there is a maximum. Landlords can only require up to two months' rent in advance. For subsequent years of renting, a landlord cannot require more than a month's rent.
A landlord can deduct damage costs from this rental deposit once the tenant moves out. They can also withhold the security deposit for a breach in the rental agreement or for unpaid rent amounts.
After the tenant moves out, the landlord must return the security deposit within 30 days. Under Philadelphia security deposit protection laws, a landlord must provide a written list of damages if they keep any of the security deposit.
This list with the remaining balance also needs to be provided to the tenant within 30 days of them moving out.
If a landlord doesn't comply with these laws, the tenant is entitled to double the security deposit and any interest earned. If the tenant doesn't provide the landlord with their new address in writing, the landlord is no longer liable.
The Landlord-Tenant Act of Pennsylvania
The Landlord-Tenant Act of Pennsylvania states where residential security deposits can be kept and when interest must be returned to the tenant.
A security deposit has to be greater than $100 for this law to apply.
Security deposits over $100 must get deposited in an approved bank. The landlord must give the tenant a notice of the location of the deposit.
If a tenant is in their third year of a lease, the landlord must place the security deposit in a bank account that bears interest. At the end of that year, the landlord must begin giving the tenant yearly interest payments from the bank.
Landlords can keep less than 1% of the fees.
When Can Landlords Keep a Security Deposit?
Landlords have the right to deduct from a tenant's security deposit for certain reasons. Most commonly, landlords will use a security deposit to pay for severe damages aside from standard wear and tear, such as:
- Broken tiles or fixtures
- Broken walls
- Broken windows or window screens
- Clogged drains from negligence or misuse
- Excessive mold or mildew
- Broken appliances
Along with covering unpaid rent, landlords can also use the security deposit to clear unpaid utilities when a tenant moves out. Pennsylvania tenants are required to pay utility bills in their name.
Protecting Security Deposits as a Landlord
It's difficult to keep up with laws on security deposits in Pennsylvania without the help of a property management team. Landlords who hire property managers allocate tenant management to them.
To help with Philadelphia security deposit protection, hire our team of experts. Contact us today to learn more about our services.
