5 Mistakes Landlords Make with Security Deposits in Philadelphia

5 Mistakes Landlords Make with Security Deposits in Philadelphia

Managing security deposits correctly is crucial for compliance with Pennsylvania law. At TrustArt Realty, we help landlords navigate these regulations to avoid costly lawsuits.

1. Commingling Funds

According to Pennsylvania law, security deposits must be held in a regulated financial institution.

Important: You cannot mix tenant funds with your personal bank account. They must be kept in a separate escrow account.

2. Charging Too Much

Did you know there is a cap on how much you can charge?

• First Year: Maximum of two months' rent.
• Second Year: Maximum of one month's rent.

New for 2025: As of December 2, 2025, Philadelphia landlords with 3 or more units must now offer an installment plan if the security deposit exceeds one month's rent. Failure to offer this option can lead to non-compliance penalties. Learn more about the New Philadelphia Security Deposit Installment Law 2025.

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3. Missing the 30-Day Return Window

You must return the deposit (minus legitimate deductions) within 30 days of lease termination.

• If you fail to do this, you forfeit the right to withhold any money.
• You may be liable for double damages (paying the tenant twice the amount of the deposit) if you miss this deadline.

4. Deducting for Normal Wear and Tear

You can only charge tenants for actual damage (e.g., a hole in the wall or a broken window). You cannot charge for "normal wear and tear" that occurs naturally over time.

• Wear and Tear (Landlord's Cost): Faded curtains, minor scuff marks on paint, worn carpet traffic patterns.
• Damage (Tenant's Cost): Cigarette burns in carpet, unauthorized paint colors, broken doors.

5. Skipping the Move-In Inspection

You cannot deduct money for damages if you cannot prove the damage didn't exist before the tenant moved in.

• The Mistake: Handing over keys without a documented walkthrough.
• The Fix: Always use a Move-In/Move-Out checklist signed by the tenant and take time-stamped photos of every room, floor, and appliance before they move in.

How TrustArt Realty Protects You

We maintain escrow-compliant accounts for all our clients and perform rigorous move-in inspections with photo documentation. This ensures you have concrete evidence if you ever need to withhold funds for damages.