Residential security deposits in Pennsylvania are regulated by the Landlord-Tenant Act (68 P.S. §250.511 and §250.512). A security deposit is not the same as rent. It is money that actually belongs to the tenant, but is held by the landlord for tenant-caused damages and sometimes past-due rent. Without the agreement of the landlord, a security deposit may not legally be used as the last month’s rent.
Pennsylvania law places a limit on the amount of a security deposit that a landlord may require. During the first year of a lease the landlord may not require a security deposit of more than two months’ rent. At the beginning of the second year of a lease the landlord may not keep a security deposit equal to more than one month’s rent and must return any money greater than one month’s rent still being held as a deposit. After five years the landlord cannot increase a security deposit even if the monthly rent is increased.
The Landlord-Tenant Act of Pennsylvania also regulates where residential security deposits must be kept and when interest payments on the security deposits must be made to the tenant. The security deposit must, however, be greater than $100 or this part of the law does not apply. Security deposit monies in excess of $100 must be deposited by the landlord in an approved bank, and the tenant must be notified in writing where the bank and deposit is located. Beginning with the third year of a lease the landlord must put security deposits over $100 in an interest-bearing bank account. At the end of the third year the landlord must start giving the tenant the yearly interest that is received from the bank, less a 1 percent fee that the landlord may keep. The landlord does not have to pay interest to the tenant during the first two years of the lease. A landlord may put up a bond instead of depositing security deposits in an escrow account. This bond is intended to guarantee that the tenant will get back the deposit with interest at the end of the tenancy.
If the tenant moves out on time and gives a forwarding address to the landlord, the landlord must respond to the tenant within 30 days after the tenant moves out. After the tenant moves, the landlord is required to give the tenant a written list of any damages. (Reasonable wear and tear is not damages). The landlord must then refund the security deposit less the cost of the repairs on the list. If the landlord fails to do this, the tenant cannot be sued for any damages the landlord claims the tenant caused. In addition, if the landlord does not give the tenant this 30-day response, the tenant may sue for double the amount of the security deposit. In order to be able to sue for double the deposit, the tenant must give the landlord written notice of his or her new address once the tenant has moved out.