Security Deposit Lawsuit Investigation

Attorneys working with ClassAction.org are investigating whether the owners of major apartment complex chains have violated certain states’ laws concerning the management of renters’ security deposits—and whether class action lawsuits can be filed against them.

Some states have limits on how much a landlord can charge for a security deposit, such as no more than one month’s rent. There are also laws requiring landlords to hold their tenants’ security deposits in an escrow account and provide a receipt for where their money is being held, and some states have specific requirements for paying tenants interest on their security deposits. Certain states also require landlords to provide an itemized list of deductions if they withhold a portion of a renter’s security deposit upon moveout.

Security Deposit Laws in MD, VA, PA, NY, MA: Deductions, Interest, Receipts

Below is a list of some states’ security deposit requirements for escrow account receipts, the payment of interest, and deductions from tenants’ security deposits upon moveout.

Maryland

Under Maryland law, landlords must pay a tenant interest on their security deposit on the first business day of each year for any deposits of more than $50 that have been held for over six months.

Landlords are also required to provide the tenant a written list of damages, including documentation of the cost of materials and services, within 45 days of the end of their tenancy. Failing to do so will result in the landlord forfeiting their right to keep any portion of the tenant’s security deposit for damages.

Virginia

Virginia law requires landlords to provide an itemized list of deductions, damages and charges within 45 days of a tenant’s exit from the property. If the landlord willfully fails to do so, the tenant is entitled to their entire security deposit unless they owe their landlord rent—the amount of which can be deducted from the returned deposit.

Pennsylvania

Under Pennsylvania law, a landlord is required to pay a tenant interest on their security deposit after one year, though the landlord is entitled to one percent per year for administrative expenses. If the landlord fails to pay the correct amount of the security deposit plus interest upon the tenant’s exit, they are liable for up to twice the amount of the security deposit and unpaid interest.

Landlords are also required to provide tenants with a written list of damages within 30 days of their exit from the property. If they fail to do so, the landlord must return the entire security deposit, including unpaid interest, and loses the right to sue the tenant for damages. Tenants are not responsible for normal wear and tear.

New York

New York law requires landlords to hold a tenant’s security deposit in a trust and allows them to collect a 1% administrative fee per year. Interest on the deposit must either be held in a trust until the deposit is repaid, applied for the tenant’s use of the rental, or paid annually to the tenant.

New York law also requires landlords to provide tenants with an itemized list of damages within 14 days of their exit from the property. Failure to do so results in the landlord forfeiting their right to keep any of the security deposit.

Massachusetts

Massachusetts law requires landlords to hold a tenant’s security deposit in a separate, interest-bearing account and provide the tenant with a receipt of the deposit with the name and location of the bank where the escrow account was opened. Interest must be paid to the tenant at the end of each year at a rate of 5% (or the rate paid by the bank if it is less than 5%), and the tenant must be provided with a statement indicating the amount of interest payable to them. If the tenant does not receive the notice or payment within 30 days of the end of the year, they may deduct the amount of interest from the next rent payment.

If a landlord fails to deposit the funds in an interest-bearing account, the tenant is entitled to three times the amount of the security deposit plus interest.

Massachusetts law also requires that the landlord provide the tenant a list of itemized damages with “precise detail” within 30 days of their exit from the property. Failure to do so will result in the landlord forfeiting their right to withhold any of the security deposit or claim any damages from the tenant.

How Could a Class Action Lawsuit Help?

A class action lawsuit, if filed and successful, could help renters get back money for any mishandling of their security deposits. It could also force apartment complex operators to change any practices that may not meet their state’s requirements for security deposits.

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