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.