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Sample Security Deposit Lease Clause

What to Include in Your Lease

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Woman Filling Out a Deposit Slip
Keith Brofsky/ Photodisc/ Getty images

The security deposit provision is an essential clause to include in your lease. The exact wording and information necessary to include in the security deposit clause will vary depending on the security deposit laws in your state.

In short, you should include:

  • The amount of security deposit that will be collected.
  • Where the security deposit will be held (if your state requires you to hold it in escrow).
  • The interest rate the security deposit will be held at (if your state requires you to hold it in escrow).
  • Reasons you can keep the security deposit.
  • How the security deposit will be returned to the tenant.

Sample Security Deposit Clause:

Security Deposit. Prior to moving into the Apartment, the Tenant is responsible for depositing $ Insert Security Deposit Amount as a Security Deposit with the Landlord. This Security Deposit is security that the Tenant will comply with all the terms of this Lease. This Security Deposit may not be used to pay the last month’s rent without the Landlord’s prior written consent.

The Security Deposit will be held at Insert Bank Name in a Market-Rate (currently 0.05%) Interest bearing business savings account of the Landlord. The address of the bank is Insert Address of Bank. Interest due the Tenant will be credited as rent on each renewal date of this Lease. If there is no Lease renewal, the amount of Interest owed will be returned to the Tenant according to the same terms set forth for the original Security Deposit.

If the Tenant defaults on this Lease prior to the official move-out date, the Landlord may be able to keep all or part of this Security Deposit to cover unpaid rent and or/damage to the property.

Upon Tenant’s office move-out date, the Landlord will inspect and fully document the condition of the Tenant’s apartment. Within 30 days of the end of this Lease agreement, if the Tenant has supplied the Landlord with a forwarding address and the Tenant has complied with all terms of this Lease and returns the Apartment to the Landlord in the same good condition as when Tenant moved into the apartment, the Landlord will return the $ Insert Security Deposit Amount plus any interest earned or the Landlord will provide the Tenant with a written notice including an itemized list as to why the full Security Deposit amount is not being returned and a check for any remaining Security Deposit owed to the Tenant after such deductions have been made.

The Landlord may use as much of the Security Deposit as necessary to pay for damages resulting from the Tenant’s move-in, occupancy or move-out and demand that the Tenant replace the amount of the Security Deposit used by the Landlord.

If the Landlord sells the property, the Landlord will then be released of all liability to return the Security Deposit. The new property owner will take over full responsibility for holding and returning the Security Deposit.

*The Landlord will fully comply with the Rent Security Law (N.J.S.A 46:8-19 et seq.). This includes depositing the Security Deposit in an interest-bearing account, and notifying the Tenant of the name and address of the banking institution and the amount of the Security Deposit being held. This document shall serve as such notice.

An additional Security Deposit in the amount of $250.00> will be due for any animals found in Tenant’s apartment.

*(This portion of the clause is specific to the state of New Jersey. Your state may or may not require you to hold the Tenant’s Security Deposit in a separate interest bearing account. You would insert your own state law in this part of the Lease as well as the legal requirements in your state. Check here for a list of security deposit laws by state.

Many landlords will include a rider to the Security Deposit clause, known as the Security Deposit Acknowledgment. This acknowledgment is a receipt that the Landlord has received the Tenant’s Security Deposit and the amount that has been deposited.



Disclaimer: The information provided on this website, and any outside information linked to, is for guidance only. It is not legal advice. Please consult legal counsel for advice specific to your situation.

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