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Security Deposit

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Definition:

A security deposit is a sum of money that the tenant agrees to pay the landlord prior to moving into the rental unit. It is designed to protect a landlord against damage or non-payment of rent by the tenant. A landlord is required to hold this money in a designated interest bearing account, typically a bank savings account.

At the end of a tenant’s lease, if the tenant has fully complied with their lease agreement, the landlord will return the security deposit in full. If a tenant has violated the terms of their lease, including, but not limited to, non-payment of rent or damage to the property, a landlord may be allowed to keep all or part of the security deposit to cover their loss.

Examples:
The landlord required one and a half month's rent to be held as a security deposit in case of damage to the apartment or breach of lease.
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