Who Pays Deposits on Section 8 Vouchers?

Section 8 housing vouchers help low-income families find safe and affordable housing in any location they want to live. Landlords and tenants both undergo a screening process before they're allowed to take part in the Section 8 program. Once the family is deemed eligible and the home is approved, the tenant and landlord enter into a lease agreement for a minimum term of one year. They may use any lease they wish, but it must include a special addendum that explains their rights and responsibilities as Section 8 program participants. Most leases require that the tenant pay the landlord a security deposit.

State laws limit the amount of security deposit that a landlord can charge. In some cases, the maximum changes from year to year. In Pennsylvania, for example, the landlord may charge an amount equal to two months' rent for the first year a tenant rents a home. If the landlord and tenant renew the lease for an additional year, the landlord must refund an amount equal to one month's rent and from that year on, not hold more deposit money than the equivalent of one month's rent.

The landlord may charge a Section 8 tenant the maximum deposit that her state allows, without regard for the tenant's status as a voucher holder. The tenant is responsible for paying the security deposit directly to the landlord. The Section 8 voucher does not cover security deposits. The last month's rent, if the landlord requires it in advance, is not a substitute for it.

Rules regarding who keeps the interest security deposits earn while in escrow vary by state. And even within individual states there may be different rules for landlords who own more than a minimum number of units. Generally speaking, however, if the landlord holds the tenant's rent in an interest-bearing account, he must, at some point, pay the interest to the tenant or share it with her in whatever way the law mandates, whether or not she’s a Section 8 tenant.

The landlords must keep security-deposit money in an escrow account and keep it separate from his own money and separate from any business funds. The money remains under the landlord's control, but it's considered the tenant's property. The same rules apply to escrow accounts for Section 8 tenants as apply to non-Section 8 tenants.

Some states allow the landlord to deduct a small administrative fee each year as reimbursement for managing the escrow account of any tenant, a Section 8 tenant included. Otherwise, he may only deduct the cost of repairing damage to the unit once the tenant vacates, and he must refund any remaining money to the tenant within the period his state law mandates.

Landlords may consider damage to be any flaws that didn't exist before the tenant took possession and that were not caused by normal wear and tear. Although the definition of "normal wear" is subject to interpretation, it's reasonable to expect that minor soiling and matting of carpeting along traffic areas, light scratches in wood floors, light marks on walls and small holes from hanging art are among the defects one would consider normal wear.