Georgia Security Deposit Laws

Landlords in Georgia, like those in other states, have the legal right to collect security deposits from tenants under the Georgia Landlord-Tenant Act. These deposits serve as financial protection, covering potential damages, unpaid rent, or lease violations.

Georgia landlord-tenant law imposes specific rules on the collection, handling, and return of security deposits, outlined in Georgia Code§§ 44-7-30 to 44-7-37. Both landlords and tenants must comply with these regulations to ensure a fair and transparent rental process.

This guide to Georgia’s security deposit laws covers everything you need to know, including the maximum deposit limits, handling requirements, and return procedures. We’ll also address common questions landlords may have about security deposits in Georgia to help ensure compliance with state laws.

Georgia Security Deposit Law: Overview

• Maximum Security Deposit Fee: Landlords can charge up to two months' rent as a security deposit in Georgia.
• Pet deposits: Pet deposits are permissible and can be included as part of the overall security deposit amount.
• Collecting Security Deposits: Landlords must collect security deposits in a federally regulated escrow account and inform tenants of the account's location in writing.
• Deductions from Security Deposit: Landlords may deduct for unpaid rent, utility bills, damages beyond normal wear and tear, and costs associated with tenant abandonment.
• Return Timeline: Security deposits must be returned within 30 days after the tenant vacates the property, minus any lawful deductions.
• Holding Deposits: Security deposits must be held in a separate escrow account or secured with a surety bond, with proper notification to tenants.
• Tax Implications: Any portion of the security deposit retained for damages or unpaid fees must be reported as taxable income in the year it is applied.

Maximum Security Deposit Amount In Georgia

Maximum Security Deposit Amount

In Georgia, landlords cannot request or collect a security deposit that exceeds the equivalent of two months' rent. (GA Code § 44-7-30.1)

Additional local ordinances may apply. For example, in Atlanta, the maximum security deposit allowed is 1.5 times the monthly rent.

So, it’s crucial to study the security deposit laws specific to your area to ensure compliance. 

Pet Deposits in Georgia

Landlords in Georgia may request additional pet deposits. However, this does not apply to tenants with disabilities who rely on emotional support or service animals as outlined in both federal and state fair housing laws. 

Nevertheless, if a service animal causes damage to the rental property, the tenant is responsible for covering those damages, which may be deducted from their security deposit.

Collecting Security Deposits in Georgia

In Georgia, landlords have the right to request a security deposit from tenants at the beginning of a lease. When it comes to payment methods, landlords can select the option that best suits both parties involved.

Automating this process with an online payment system can help landlords save significant time and reduce errors. To enhance the efficiency of your security deposit collection, consider utilizing an electronic transfer system like Landlord Studio.

This property management software simplifies online deposit collection, keeps transaction records organized, and securely stores essential documents such as receipts and inspection reports.

Important Tip for Landlords: Before collecting security deposits from tenants, it's vital to conduct a move-in inspection of the rental property. This step allows both parties to assess the property's condition at the start of the lease, helping to prevent disputes over damages later on.

What Can a Landlord Deduct From a Security Deposit? 

Georgia security deposit law allows landlords to withhold or deduct part of a tenant's security deposit to be used to address specific issues that qualify as "damage." According to Georgia legislation, a landlord might use the deposit to cover the following: 

• Unpaid rent, utility bills, or pet fees.
• Repair costs for damages that go beyond normal wear and tear.
• Any losses incurred by the property manager due to a tenant abandoning the rental property.

It's important to note that landlords must adhere to two key conditions when using a tenant's security deposit for damage:

• The damage must exceed what is considered normal wear and tear.
• The damage should not have been listed in the original lease as "existing damage."

How Long Does a Landlord Have to Return a Deposit in Georgia?

In Georgia, the rules governing the return of security deposits are outlined in GA Code § 44-7-34. According to this law, landlords are required to return a tenant's security deposit within 30 days after the tenant vacates the property. This return must include an itemized list of any deductions, which should be sent via first-class mail.

To create this itemized list, landlords must conduct an inspection of the unit within three business days following the end of the lease. 

Tenants are also encouraged to inspect the property within five business days to confirm the accuracy of the listed damages. If tenants agree with the reported damages, this list can serve as evidence for any deductions made from their security deposit. 

Conversely, if tenants dispute any part of the damages, they must specify their objections and may need to pursue legal action.

If a landlord fails to provide an itemized list of deductions, they forfeit their right to withhold any portion of the security deposit. And, if a landlord does not return the deposit within the stipulated timeframe, they may be liable for up to three times the amount of the deposit, along with attorney fees.

If a landlord can demonstrate that their failure to return the deposit was due to an honest mistake, they may only be responsible for returning the withheld amount. 

Finally, if tenants do not respond to a written notice regarding their security deposit and landlords cannot locate them after making reasonable efforts, the deposit will be considered forfeited. After 90 days, it becomes the property of the landlord, and tenants lose their right to dispute it.

Holding Security Deposits and Paying Interest In Georgia

According to GA Code § 44-7-31, landlords in Georgia are required to keep a tenant's security deposit in an escrow account at a federally insured bank or state institution. Furthermore, landlords must inform tenants of the specific location of this deposit.

Alternatively, as outlined in GA Code § 44-7-32, landlords have the option to secure a surety bond equal to the total amount of the security deposit or $50,000, whichever is lower. This bond must be obtained through an authorized surety company and filed with the local Clerk of the Superior Court, which imposes a $5.00 fee for this service.

Failure to adhere to these regulations could result in landlords forfeiting their right to retain any portion of the tenant's security deposit under Georgia law. 

Landlords are not obligated to pay interest on the security deposit.

Taxes and Security Deposit Deductions

When it comes to security deposits, landlords must be aware of their tax implications, particularly regarding whether they retain the deposit or return it. 

If a landlord is obligated to return the security deposit, the IRS does not classify it as taxable income. However, once the landlord no longer has to return the deposit—such as when a tenant forfeits it—it becomes taxable income.

Scenarios Requiring Income Reporting

Here are some situations in which landlords must report security deposits as income:

• Forfeited Deposits: If a security deposit is forfeited due to a lease violation or unpaid fees, it must be reported as taxable income in the year it is applied.
• Repair Expenses: If a portion of the security deposit is used to cover repair costs, that amount should be reported as income. Conversely, if the landlord does not claim these repairs as expenses, they are not required to report them as income.
• Last Month's Rent: If both the tenant and landlord agree to apply the security deposit toward the last month’s rent, the landlord must include that amount as income when received.

To stay compliant with IRS regulations, landlords should report any of these scenarios as rental income in the year they occur.

Managing security deposits and navigating tax filings can be complex, but tools like Landlord Studio can simplify the process. This property management software offers features that help landlords efficiently manage security deposits while ensuring adherence to tax laws.

Georgia Security Deposit Laws: Final Words

The key points to remember from this article include the limits on security deposit amounts, the importance of conducting move-in inspections, and the requirement to return deposits within 30 days. It is crucial for landlords to be aware of these regulations to ensure compliance, safeguard their rights, and support tenant protections.

To effectively manage security deposits and stay in line with tax laws, landlords can take advantage of property management tools such as Landlord Studio. For additional resources and legal forms related to security deposits in Georgia, it’s advisable for landlords to reach out to local housing authorities or consult with legal professionals.

Georgia Landlord Tenant Laws

• Georgia Landlord Tenant Laws: Overview 
• Georgia Tenant Screening Laws
• Guide To Rental Applications Laws in Georgia [+Free Template]
• Guide To Georgia Lease Agreements [+Free Template] 
• How Much Can You Raise The Rent in Georgia
• Georgia Eviction Laws

Georgia Security Deposit Laws: FAQs

Can a security deposit be used to cover the last month's rent?

Yes, a security deposit can be applied to the last month's rent if both the landlord and tenant agree to this arrangement.

What can be deducted from a security deposit in Georgia?

Deductions from a security deposit may include:

• Unpaid fees
• Damages that go beyond normal wear and tear
• Losses incurred due to the tenant abandoning the property

How long do landlords have to return a security deposit in Georgia?

Landlords are required to return the security deposit within 30 days after the lease ends.

What are the consequences for landlords who fail to return the security deposit?

If a landlord does not return the security deposit, they could face legal repercussions and may be liable to pay up to three times the amount of the original deposit, in addition to any attorney fees.

What is the maximum amount a landlord can charge for a security deposit in Georgia?

In Georgia, landlords may charge a security deposit equal to one or two months' rent. This deposit serves as protection against potential damages or unpaid rent. It is essential that the lease agreement clearly states the amount of the deposit and any conditions under which it may be withheld.

How should landlords manage and store a security deposit in Georgia?

Landlords must keep the security deposit in a separate escrow account at a federally regulated depository. They are also obligated to inform tenants of the name and address of the institution holding the deposit. This requirement helps ensure that the funds are secure and not mixed with the landlord's personal finances.

What are the deadlines for returning a security deposit in Georgia?

Upon lease termination, landlords must return the security deposit, minus any lawful deductions, within 30 days. If they fail to do so within this period, tenants may be entitled to receive the full deposit amount along with additional damages.