Security deposit
Money the tenant pays at move-in to cover potential damage or unpaid rent. Held by the landlord and returned after move-out, minus documented charges. Maximum amounts and timelines vary by state.
Every term like this one lights up in the step you're on.
Free to set up. No credit card.Part 1 of 4
Why a seller cares
At the sale of a rental the tenant's deposit goes to the buyer, usually as a credit on the settlement statement, and the tenant is told. A seller who keeps it is holding money that is not theirs.
Part 2 of 4
A simple example
Your tenant's $1,500 deposit is credited to the buyer at closing, the tenant gets written notice of the new landlord, and the buyer returns it at move-out.
| What happens to the deposit | When |
|---|---|
| Credited to the buyer | At closing, on the settlement statement |
| The tenant notified in writing | At or right after closing, as most states require |
| Returned to the tenant, less documented charges | By the buyer, at move-out, within the state's deadline |
The deposit belongs to the tenant and is held by whoever owns the building.
Part 3 of 4
What people get wrong
That the seller returns the deposit at closing. The tenancy continues, so the deposit moves to the buyer, not back to the tenant.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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