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Pennsylvania Security Deposit Laws

When landlords collect a security deposit from their tenants, they can use that deposit to cover a variety of expenses. These expenses include things like covering unpaid utilities upon move-out, covering excessive cleaning costs, covering excessive property damage, covering lost rental income, and covering losses in rent payments.

Essentially, a security deposit is meant to protect the landlord against potential tenant actions that may result in any financial losses on their part. As a landlord in Pennsylvania, you have a right to collect a security deposit from your renters. You must abide by the landlord-tenant law surrounding security deposits in Pennsylvania.

The following are the Pennsylvania security deposit laws to abide by to be a successful landlord. Understanding security deposit regulations is key to a landlord's success, so keep reading to learn more.

Security Deposit Limit

There is a limit to how much a landlord can collect from a tenant as a security deposit under Pennsylvania law. The specific amount depends on the length of the lease and the rent amount.

For a tenant in their first year on the lease, a landlord can charge a maximum security deposit of two times the cost of one month's rent. For residents entering into the second year of their lease or rental agreement, the security deposit in Pennsylvania cannot exceed one month’s rent.

If a tenant is in the fifth year or more of their lease, a landlord can’t increase the security deposit even if they are increasing the rent the tenants must pay.

Close up of hands using a blue calculator, a landlord determining the cost of security deposits

Security Deposit Storage

Pennsylvania security deposit law dictates that landlords must store their tenants' security deposits in one of two ways. The first option is to store the deposit in an escrow account.

The account for the deposit must be in a financial institution that is regulated by either the state’s Department of Banking, the Comptroller of the Currency, the Federal Home Loan Bank Board, or the Federal Reserve Board. The escrow account may either be interest-bearing or not.

The other option is to post a guaranteed bond for the security deposit amount. The bond company issuing the bond must be authorized to operate in Pennsylvania.

The landlord must pay interest to a tenant starting in their third year or 25th month of tenancy. They may subtract a 1% management fee from the accrued interest.

Right to Notice After Receipt

Renters in the state of Pennsylvania have a right to be issued a written notice or receipt of their security deposit if the landlord stores it in an escrow account. In the proof of written notice or receipt for the deposit, the landlord must provide the tenant with the following account information according to security deposit laws:

  1. Name of the bank.
  2. Address of the bank.
  3. Amount of security deposit that has been deposited in the account.

Desk with an open laptop, phone, coffee cup, and notepad

Reasons to Withhold a Tenant’s Security Deposit

According to security deposit laws in Pennsylvania, a landlord may be able to withhold a portion or all of the tenants' security deposit to cover the following situations.

  • Unpaid rent. If a tenant hasn't paid their rent and wants to use their security deposit to pay for the last month's rent, you can choose to agree to this or not.
  • Expenses that have accrued as a result of the tenants not meeting their obligations.
  • Money for damages by tenants exceeding normal wear and tear.
  • Fee of repainting the property due to damage beyond wear and tear, including water damage, large or deep scratches, and stains. You must not, however, charge the tenant for minor cracks in the original paint or fading due to sunlight exposure.
  • Money for replacing the carpet. Again, the damage must exceed normal wear and tear. Such damage includes burns, visible stains, or rips. A landlord cannot charge the tenant for damage resulting from wear and tear like gentle wear to the carpet, indents from furniture, or fading from sunlight exposure.

Just like in most other states, there is no legal limit to how much landlords can charge for damages in Pennsylvania law. The only requirement is that the charges must be reasonable.

If the costs of fixing the damage exceed the security deposit amount, the landlord may be able to sue for the extra costs. However, if a landlord fails to return the remainder security deposit within 30 days of the lease ending, they cannot sue for any additional damages the tenant may have caused during the lease.

Normal Wear and Tear vs Damage

This is often a point of conflict between landlords and renters. Understanding what constitutes what kind of damage can help avoid potential conflicts or misunderstandings when it comes to returning a security deposit.

One person on a ladder painting a wall while another person holds the ladder in the property they rent

Normal wear and tear refers to the normal deterioration a property undergoes with time. Examples of this kind of damage include lightly dirtied grout, stained bath fixtures, loose door handles, faded paint, and gently worn carpets.

Damage, on the other hand, refers to damage that occurs due to carelessness or negligence on the tenant’s part. Common examples of damage include missing fixtures, holes in the wall, missing tiles, and burned carpets. The money for these repairs can come from a security deposit.

Walk-Through Inspections

In some states, tenants have a right to a walk-through inspection before the tenant's lease is up. The inspection helps highlight any damage exceeding wear and tear the tenants have caused.

And if any are found, the tenant gets an opportunity to remedy the issues before they can move out. If they don’t, the landlord may then make appropriate deductions to the security deposit. According to Pennsylvania law, a walk-through inspection with tenants isn't required, but it's never a bad idea to do one at the end of a lease.

Returning a Tenant’s Security Deposit

If the landlord has made no deductions to the tenant’s deposit, they must return it within 30 days of the tenant's lease ending. Make sure to ask for a forwarding address before the tenant vacates the property.

Pennsylvania security deposit laws dictate that if they have made deductions, the landlord must return what remains of the deposit to the tenant within 30 days of the end of the lease. They must also provide the tenant with an itemized list of deductions plus their approximate or actual repair costs.

A stack of rent related items that includes a file folder, red notebook, and iphone open to the calculator app

Failure to return the deposit within the specified time may result in the landlord being liable for two times the full deposit amount. Failure to provide an itemized list when making deductions may also result in them losing their right to keep any deductions.

If the tenant fails to provide a forwarding address, they’ll lose any responsibility to refund the deposit to the tenant.

Pennsylvania Security Deposit Laws: Bottom Line

Charging a security deposit is key. Security deposits act as a financial cushion against a ton of potential issues, such as unpaid rent and damage exceeding regular wear and tear.

As a landlord, you do, however, have to adhere to all of the state’s security deposit laws when charging a deposit. The landlord must charge the right amount, store the deposit it properly, and return the security deposit within the specified time.

If you have more questions about Pennsylvania security deposit laws, other aspects of landlord-tenant law, Pennsylvania eviction process, or need help with the management of your property, TrustArt Realty can help. We provide comprehensive property management services to property owners in Philadelphia. Get in touch to learn more!

Disclaimer: This blog should not be used as a substitute for legal advice from a licensed attorney in your state. Laws change, and this post might not be updated at the time of your reading. Please contact us for any questions you have in regards to this content or any other aspect of your property management needs.


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