Security deposit is meant to recover the cost that may arrive due to damage caused by regular use of the house by tenant or in case a tenant leaves the house before the agreement period resulting into unpaid rentals or can be for late charges. In some instances depending on the lease agreement few other fees like utility bills and cleaning charges are also deducted from security deposits.

The security deposit earns very little in terms of interest each year, it varies from one year to the next. The rate of interest is never fixed. The tenant should give the security deposit to a landlord in the form of check or by money order and should keep a copy of the same for records. Different states have varying laws pertaining to security deposit in some states the landlord is supposed to credit the security deposit along with interest earned each year to their tenants.

The interest for security deposit is calculated applying the principle of simple interest. In order to calculate simple interest for complete one year, if the principal amount is considered as $1,000 and the rate of interest is 1 percent, then the interest would be equal to $1,000 * 1 percent which comes out to be $10. If the tenant leaves before one year, say for instance after seven months, then the interest earned for 7 months would be equal to $1,000 * 1 percent / 12 *7

One thing you must keep in mind that not all state allows interest in the security deposit. For this you have to see the how the city or state rules affect you as a tenant or a landlord.

More Articles :

• Calculate Interest On Security Rent Deposits
• Getting Security Deposit Back
• Landlord And Breach Of Security Deposit
• Sample Security Deposit Refund Letter
• Security Deposit Law

RENTING :

• Landlord
• Tenant
• Tenant In Common
• Eviction
• Joint Tenant
• Rental Agreement
• Security Deposit
• Sublet

Getting Security Deposit Back

      The security deposit is meant to recover the financial loss or damage occurred to a landlord due to tenant’s fault. Of course the landlord cannot keep back your security deposit for regular wearing away of certain items like carpet, chipped paint, worn out furnish on a wooden floor and discolored painting. Also, in circumstances where the apartment or the house you have rented gets damaged by some natural means like fire, storm, floods or a gangster, then you need to inform the landlord immediately. And, also keep the police informed. The landlord then cannot charge the tenant for the repairs or deduct money from the security deposit. More..