Security deposit
Money the tenant pays at move-in to cover potential damage or unpaid rent. Held by the landlord and returned after move-out, minus documented charges. Maximum amounts and timelines vary by state.
Your Room opens on going under contract and closing, with the offer and everything before it already ticked.
Organize my saleFree to set up. Pay once when you list: $89 or $189. 7-day refund.
See how it worksWhere this comes up: closing
Part 1 of 4
Why a seller cares
At the sale of a rental the tenant's deposit goes to the buyer, usually as a credit on the settlement statement, and the tenant is told. A seller who keeps it is holding money that is not theirs.
Part 2 of 4
A simple example
Your tenant's $1,500 deposit is credited to the buyer at closing, the tenant gets written notice of the new landlord, and the buyer returns it at move-out.
| What happens to the deposit | When |
|---|---|
| Credited to the buyer | At closing, on the settlement statement |
| The tenant notified in writing | At or right after closing, as most states require |
| Returned to the tenant, less documented charges | By the buyer, at move-out, within the state's deadline |
The deposit belongs to the tenant and is held by whoever owns the building.
Part 3 of 4
What people get wrong
That the seller returns the deposit at closing. The tenancy continues, so the deposit moves to the buyer, not back to the tenant.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
Your Room defines security deposit in the step you meet it in, beside the document or the date it belongs to. Free to set up, with an agent or on your own.
Organize my saleFree to set up. Pay once when you list: $89 or $189. 7-day refund.