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Contents
This article provides general information and is not legal advice. For accuracy and specific guidance on landlord-tenant laws, consult an attorney before making any decisions or taking action.
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For landlords, security deposits are legal safety nets that protect them against financial losses from nonpayment of rent, lease violations, and property damage caused by tenant.
However, there are specific laws that govern how these security deposits are collected, stored, and returned. Landlords and tenants must understand these laws to ensure a smooth rental experience.
This article will cover everything landlords need to know about security deposits in Pennsylvania, from the maximum allowable amounts to security deposit returns. Additionally, we will address common questions about Pennsylvania security deposit law at the end of this article.
Pennsylvania has specific laws that limit how much a landlord can charge as a security deposit for residential properties, outlined in 68 Pa. Stat. § 250.511- 68 Pa. Stat. § 250.512.
According to Pennsylvania security deposit law, landlords cannot charge more than two months’ rent as a security deposit for the first year of any lease. For subsequent years or lease renewals, the security deposit is capped at one month’s rent. (68 Pa. Stat. § 250.511(a)).
Security deposits can be increased in tandem with rent increases. However, tenants who have been residents of a rental property for five years or more are exempted from security deposit increases with rent.
Landlords are allowed to collect an additional pet deposit to cover pet-related damages. Yet, they cannot exceed the legal limits for security deposits in Pennsylvania.
It's important for landlords to note that emotional support animals are exempted from pet deposits, as per the Fair Housing Act. However, the tenant is still liable for any damages caused by their service animal since pets are classified as personal property under the 1982 Act 225 of the Pennsylvania General Assembly.
Furthermore, it's important to note that all the provisions under Pennsylvania law concerning maximum security deposit amount cannot be waived by contract or any other legal instrument.
Landlords have the right to request and collect a security deposit from tenants at the beginning of a lease in accordance with the Pennsylvania Landlord and Tenant Act. However, like most states in the U.S., there are specific guidelines that govern the collection, storage, withholding, and return of these deposits. We detail each of these guidelines in more detail further down the article.
In summary though, landlords can collect a security deposit as well as the first and last months rent, before the lease starts, however, the amount collected and held in escrow cannot exceed two months rent, as mentioned above. Additionally, landlords must store the deposit in a federally backed account and notify the tenant of it's location in writing. Landlords in Pennsylvania are required to pay interest on security deposits held for more than 2 years and have up to 30 days to return the deposit after the lease end date.
While you can manage the collection of security deposits from tenants manually, it's more efficient to automate the process using an electronic transfer system like Landlord Studio.
Landlord Studio offers an efficient solution for managing both rent collect security deposit collection. By collecting these payments online you are able to establish clear and organized transaction records alongside important documents like deposit receipts. Payments are made securely into your chosen bank account via the ACH network. Plus, you can automate tenant communications to quickly notify tenants of received payments and send templated emails regarding how and where the deposit is stored to ensure compliance with strict regulations.
Create your free Landlord Studio account today to make managing security deposits and rent collection easier than ever.
Landlord Tip: Before collecting security deposits from tenants, it's crucial you conduct a move-in inspection of the rental property with the tenant. This practice allows both the landlord and tenant to assess and document the property's condition at the start of the tenancy, helping to minimize potential disputes over damages in the future.
According to the 68 Pa. Stat. § 250.512(a), landlords are allowed to make deductions from a tenant’s security deposit to cover:
All the guidelines for security deposit returns in Pennsylvania are outlined in 68 Pa. Stat. § 250.512.
According to subsection (a) of this statute, landlords have 30 days of the lease ending or the tenant vacating to return the security deposit. When returning the deposit landlords are required to provide the tenant with an itemized list of any deductions they made from the security deposit, if any were made.
Failure to provide the tenant with an itemized list of deductions could result in penalties or fines. For example, landlords could lose the right to withhold any part of the security deposit or sue tenants for damages to the rental property.
It's important for landlords to note that the rights of tenants to a security deposit return cannot be waived in the lease agreement or through any other legal instrument. However, landlords can keep the entirety of the security deposit if the tenant doesn't provide his new address in writing after vacating the rental property.
Per 68 Pa. Stat. § 250.511b(a), security deposits of more than $100 must be held in an escrow account—either interest-bearing or noninterest-bearing. The financial institution housing the escrow account is also expected to be one that is regulated either by the Federal Reserve Board or the Pennsylvania Department of Banking.
If the security deposit is placed in an interest-bearing escrow account, landlords are required to pay interest accrued on the security deposit to tenants starting from the third year of the lease. However, it's important to note that landlords are allowed to charge an administrative fee of 1% per annum on the interest earned from the deposited amount. (68 Pa. Stat. § 250.511b(b))
Additionally, Pennsylvania security deposit law requires landlords to provide a written notification about details about the escrow account, including the name and address of the bank where it's stored and the total amount, to the tenant.
Failure to adhere to the storage and disclosure requirement of security deposit in Pennsylvania would lead to legal repercussions.
According to the IRS, security deposits are not considered taxable income since in most cases landlords are required to return the deposit to the tenant after the conclusion of the lease. However, security deposits can become taxable under Pennsylvania security deposit law when they are transferred to the landlord.
This only happens in three ways;
To comply with Pennsylvania security deposit law, landlords are required to report any of the above scenarios as rental income in the year it's kept.
Tax filing for security deposit doesn't have to be a hassle. Using software like Landlord Studio can streamline this process, making it easier for landlords to manage security deposits and ensure compliance with tax regulations.
Create your free Landlord Studio account today to make security deposit and rent collection easy.
Under Pennsylvania security deposit laws is crucial for landlords and tenants to ensure a smooth rental experience.
As we've mentioned earlier, landlords can only charge a maximum security deposit of two month's rent for the first year of a lease. Subsequent years are capped at one month's rent. However, property owners must ensure they manage them responsibly, including valid deductions and timely returns.
By following these regulations, landlords can reduce disputes and foster a positive relationship with tenants, ultimately leading to a successful rental arrangement.
Yes. However, it must be expressly agreed upon by the tenant and landlord to use the security deposit as the last month's rent.
In Pennsylvania, landlords are permitted to charge a cleaning fee, but only if it is necessary to restore the rental unit to its original condition. This fee can only be deducted from the tenant's security deposit if the lease explicitly allows for such deductions.
Landlords are required to return the tenant's security deposit within 30 days following the termination of the lease. If no deductions are made, the full amount must be refunded. Even in cases where deductions occur, landlords must reimburse the tenant for any remaining balance within this timeframe. Failure to comply can result in the tenant receiving up to double the withheld amount.
If a landlord in Pennsylvania fails to return a security deposit or provide a written list of damages within 30 days after the lease ends and possession is returned, they forfeit their right to withhold any portion of that deposit. In such cases, tenants have the right to sue for recovery of up to twice the amount of the security deposit that was improperly withheld.
Normal wear and tear refers to the natural deterioration that occurs over time due to regular use of the property, without any negligence or abuse by the tenant or their visitors. Examples include minor scuffs on walls, slight carpet wear from foot traffic, and faded paint.
