Can an Apartment Require a Non Refundable Deposit?

Before you move into an apartment, your new landlord might require you to pay various costs that can range from a security deposit and pet deposit to move-in and application fees. While fees are usually not refundable at all, deposits are held in a special account and typically refunded to you after you move out. However, when your security deposit goes toward paying your last month's rent, for example, you might consider it a nonrefundable deposit, at least partly. In addition, you may not get your full deposit money refunded if you or your pet cause damage to the apartment or you otherwise break your lease agreement's terms.

After you complete your apartment rental application and your landlord has approved it, you may be asked to pay a security deposit before moving in. This is often an amount covering one or two months of rent (such as for the first and/or last month of the lease term). This deposit is usually refundable, meaning you get it back when you move out as long as you've not caused damage to your apartment or broken any other commitments in your lease agreement. In some cases, though, part of the security deposit is applied to your rent, and these costs are often nonrefundable as a result.

This common type of deposit has two main purposes. First, if you fail to pay rent or cause any damage to your apartment – say you make a hole in the wall or stain the carpet – that deposit money can be used to recoup the costs and trouble the landlord goes through. Second, this deposit offers some peace of mind to the landlord that you'll take better care of the apartment since you'd likely want your full deposit back when you move out.

State laws determine how large your security deposit can be. Some states like Ohio, Colorado and Florida place no limit at all on what a landlord can charge you for a security deposit, while others limit it to one to two months of rent. Others like California and Connecticut have limits based on factors like age or whether the place is furnished.

Besides a security deposit, you may pay a pet deposit if you bring a cat or dog to live in the apartment. This is often based on the number of pets you have but can also be a flat amount. This type of deposit offers some protection that your landlord can clean up after or repair any damage your pet causes. This type of deposit is usually refundable, meaning you may get it back if you carefully clean up any messes and smells and keep your pet from expressing destructive behaviors like biting and clawing.

State laws also determine how much the pet deposit can be. For example, Nolo mentions that Hawaii allows a pet deposit of up to one month of rent, while North Dakota landlords can charge up to $2,500 or two months' rent for the pet deposit on top of other costs. Washington, Texas and Utah are among the states with no statutes on how much pet deposits can be.

Similarly, some landlords will charge a pet fee instead of a deposit; this fee serves a different purpose. While the deposit provides some protection from damages from your pet, the fee simply pays for the right for you to have the pet in your apartment. You can expect to not get this money back when you move out, and you might even have to pay extra if your pet does cause any damage.

While some landlords waive this fee as part of a move-in special or forego it if they charge a security deposit, there may be a nonrefundable move-in fee. This money helps landlords pay for costs involved in preparing your apartment for your occupancy. For example, you might pay a $300 move-in fee that your landlord uses to change the lock on your door or touch up some peeling paint on your kitchen wall. Depending on the landlord, you may be able to negotiate this nonrefundable fee to save some money.

You likely also already paid an application fee when you submitted your rental application. This fee covers the costs of processing your application and checking your employment, credit and rental history. Since it's usually nonrefundable, you likely won't get the money back even if your rental application gets denied.

The Tenant Resource Center states that security deposits must be deemed as refundable since the funds are held as a form of security. However, that does not mean you'll get all the money back, especially when the money is applied toward rent costs or repairs for damage you've done. But you can expect to get the excess back as long as you fulfill your obligations as a tenant.

SJA Property Management further clarifies that a nonrefundable deposit agreement in your lease contract is legal when the security deposit money will either:

• Cover a month of your regular rent cost.
  
• Help cover the cost of repairs (beyond routine maintenance), utilities and other costs (like late fees).
  

Even when these nonrefundable deposit conditions are met, your landlord is required to clearly state how much of the deposit is nonrefundable and put those funds to real use. For example, if part of the deposit is for a carpet cleaning fee when you move out, then your landlord is obligated to actually clean the carpet and be able to prove he had the job completed. This means you have the right to ask for a receipt for cleaning and potentially take action against the landlord if he misuses your deposit money.

Generally, similar rules apply to pet deposits as they do to security deposits. These deposits are usually refunded in full when your lease expires, as long as your pet hasn't caused damage. But the landlord does have the right to use some of that money to pay for damages.

So, if your landlord ends up having to deep clean the carpet to remove pet stains, you may not get back all your pet deposit money, or any, in the end. Be sure to check your leasing agreement for specific terms for getting your pet deposit back.

When your landlord collects your security deposit and pet deposit, the money usually sits in a special bank account. These funds can earn interest, in which you'll gain that extra money when you receive your refund. State laws vary on the conditions for which interest must accrue and whether it must accrue at all. For example, the deposit may have to exceed a certain amount or be for a lease exceeding a specific term.

After you move out, your landlord will have a state-specific deadline for refunding your deposit money. The return timeline can depend on factors such as whether you gave your landlord sufficient notice or whether you dispute any deductions. Most states have deadlines of 30 days or less, while Indiana, Alabama, Maryland and Oklahoma are among those with longer periods of 45-60 days. Tennessee has no return deadline at all, while New York law only requires that the refund happens within a "reasonable time."

If your landlord doesn't refund you in time or tries to unjustly deduct money from your deposit, Rocket Lawyer suggests you may be able to take your landlord to small claims court. Again, state laws will determine what the penalty is and what you can gain if you win the case. At the very least, you can expect to get the security deposit back if the court finds that your landlord broke the law.