Security Deposits

The end of the lease is a time to assess the condition of the premises and determine whether any or all of the tenant’s security deposit should be returned. Because the landlord will likely be preparing the unit for the next tenant, it is important to determine what work must be done and whether any existing damage was caused by the outgoing tenant. Where a residential lease exists, Pennsylvania law requires the landlord to notify the tenant promptly of any damages assessed and any charges to the security deposit. Typically, the landlord may charge the tenant for any damage over and above normal wear and tear.

The landlord must provide the tenant a written list of damage to the premises within 30 days after the termination of the lease or surrender and acceptance of the premises. The purpose of the list is to apprise the tenant of the damages that the landlord believes are the tenant’s responsibility. Within that same 30 days, the landlord must also make payment of the balance of the security deposit remaining after deduction of the amount retained by the landlord for actual damage to the premises and for any remaining rent due. For simplicity, the list and any payment should be sent to the tenant together. Failure to comply with the law may result in some major indigestion for the landlord.

If the landlord fails to deliver the written accounting of damages within 30 days, he forfeits all rights to withhold any of the security deposit and to sue the tenant for damage to the premises. By merely failing to send the written accounting on time, the landlord must return the entire security deposit and is precluded from suing the tenant for damages no matter what the extent of the harm to the premises. If the landlord fails to pay the balance of the security deposit within 30 days, the tenant can recover double the amount wrongfully withheld.

So, by simply forgetting to send the list and return the balance of the security deposit, the landlord could be stuck with a damaged rental unit which he has to fix at his own expense and pay the tenant double the amount of the security deposit. Surprisingly, the situation might get worse. There is some legal authority which suggests that a landlord might also be held liable for treble damages (three times actual damages) and legal fees under the Pennsylvania Unfair Trade Practices and Consumer Protection Law; such an outcome might require some evidence of deception on the part of the landlord.

It should be pointed out that the failure of the tenant to provide the landlord with his new address in writing upon termination of the lease or upon surrender and acceptance of the premises relieves the landlord from having to send the list or return the security deposit within 30 days and from any related penalties. A landlord would be wise to pay careful attention to any notes or correspondence from the tenant around the end of the lease. Often, a forwarding address is simply put in an envelope and slipped under a door or through a mail slot. If the tenant does not provide the new address but the landlord knows or could easily find out that address, it would be prudent to send the required accounting and any return of security deposit to the tenant to avoid a later dispute over whether the new address was provided. Frequently, there will be a forwarding address left with the post office.

The landlord has the right initially to assess damages at his discretion as long as it is done in a timely manner. Often, the tenant will disagree with the assessment and request the return of the security deposit retained by the landlord. If the landlord refuses, the tenant may commence a lawsuit. If the landlord has not complied with the law by providing a timely list of damages or return of the security deposit, the tenant’s recovery could go well beyond the balance of the security deposit.

— Curt Ward

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