Pennsylvania Security Deposit Law

Maximum Security Deposit Amount

Maximum amount: A Pennsylvania landlord cannot charge more than 2 months’ rent for a security deposit during the first year of tenancy. When a tenant renews a rental contract starting in year 2 and on, the security deposit should not be over 1 month’s rent. When the lease has been renewed for 5+ years, the security deposit must stay the same, even if the rent has increased (68 PS § 250.511a).

These security deposit laws are specific to residential properties in Pennsylvania. If the property is furnished, the landlord might feel it necessary to charge a higher deposit. However, the deposit shall not exceed the above-stated maximum, regardless of the furnishing status.

In addition, the length of the lease (short term vs. long term) does not impact the deposit amounts, nor does the number of properties a landlord owns.

Pet deposits: Pennsylvania’s security deposit law does not prevent pet deposits. However, the landlord should include the pet deposit in the total security deposit, which shall not be over 200% of a month’s rent in a 1-year tenancy or 100% of the month’s rent starting in year 2 (68 PS § 250.511a). Landlords may not charge a pet deposit for ESAs or service animals.

Penalties: A tenant may pursue legal action if the landlord charges too much for a deposit. In addition, if the landlord doesn’t return the deposit refund or the itemized list of deductions within a maximum of 30 days past the last day of tenancy, the landlord may have to pay the tenant two times the amount (68 PS § 250.512).

Handling Damage Deposits

Like many states, Pennsylvania has specific guidelines for how landlords must keep track of security deposits.

Security deposit storage: The landlord must inform the tenant of the bank name and address of the institution holding the deposit. It doesn’t need to be in a separate bank account during the first 2 years. However, once the tenant has lived at the property for more than 2 years, and the security deposit is over $100, the landlord has to put it in a different escrow account that bears interest (68 PS § 250.511a).

Interest-bearing account: The landlord must store the security deposit in an interest-bearing account starting in year 3 of the tenancy, assuming the deposit is $100 or more. The tenant is entitled to that interest each year, with any remaining interest paid at the end of the tenancy (68 PS § 250.511a).

Receipt: While Pennsylvania law does not mandate that landlords provide a security deposit receipt, landlords must give the tenant written notice about the location of the security deposit and the amount in escrow. At the end of the lease, they must also provide a written list of deductions and receipts for every deduction within 30 days of the lease end date (68 PS § 250.512).

Documentation: Landlords should use a move-in/move-out checklist to prevent disputes. They should also keep track of all receipts so there’s no question about the property condition and how it has changed during the tenancy.

Ownership transfer: Pennsylvania security deposit laws don’t specifically mention property sales rules. However, if a property is sold, it is a general rule that the landlord should transfer the security deposit and provide all documentation to the new landlord. They must also notify the tenant about the change in ownership.

Ultimately, this will ensure the tenant knows who to contact about maintenance and other issues in the future and who to give notice to if they ever decide to move out.

One of the security deposit requirements is that the tenant must provide their forwarding address before moving out or at the time of giving notice. If they don’t have the new tenant’s information, that could cause issues in the future (68 PS § 250.512).

Deductions

What landlords cannot deduct: It is illegal for landlords to make security deposit deductions for wear and tear. Landlords may use security deposits for excessive damage or cleaning needs, unpaid rent or utilities, abandonment, or issues caused by smoking. However, if the property looks lived in, that is an insufficient reason to deduct from the security deposit. All deductions must be itemized and justified to ensure they are legally sound. Otherwise, the tenant could be entitled to damages (68 PS § 250.512).

Reasons landlords cannot deduct: Landlords may not deduct normal wear and tear costs. These include, but are not limited to, worn carpet or flooring, tiny nail holes, dust, or paint that looks worn. These examples are expected and unavoidable after a tenant lives in a rental property. It’s when property damage exceeds normal wear and tear that damage charges could apply. The landlord reserves the right to deduct these from the security deposit accordingly, as long as they itemize the deductions and collect the receipts for any repairs (68 PS § 250.512).

Return Timeline

Time frame: In Pennsylvania, landlords must return the security deposit to the tenant 30 days after the tenancy ends. The full deposit, minus any applicable deductions, must be paid by then. Whatever remains from the security deposit shall come with an itemized list of deductions and interest. If the landlord misses this time frame, the security deposit terms could be voided, making them responsible for any deductions and up to double the amount owed to the tenant (68 PS § 250.512).

Deduction tracking: If the landlord must deduct from the deposit due to property damage, they must keep track of the deductions and send them in written format to the tenant when returning the remaining deposit. The deductions should include each specific charge, the reason for the deduction, and the applicable receipt (68 PS § 250.512).

Itemized deduction notification: Landlords should mail the itemized list of deductions within 30 days of the tenant officially leaving the property. If the landlord does not adhere to the Pennsylvania security deposit laws, whether by sending it outside of the designated time frame or not sending the itemized list of deductions or receipts, they risk having to pay double the amount owed. The landlord will not be liable if the tenant does not provide a forwarding address (68 PS § 250.512).

Penalties: If a landlord fails to comply with the above guidelines, such as not sending the tenant the security deposit with the itemized list of deductions within 30 days post-lease, the landlord will be unable to keep any part of the security deposit. They will also be unable to pursue legal action if there has been excessive damage to the property.

In addition, if the landlord doesn’t pay the tenant the full amount owed, they may have to pay twice the total of the security deposit with the relevant interest. One exception is that if the tenant doesn’t provide the landlord a forwarding address, the landlord forfeits all liability (68 PS § 250.512).

Handling Disputes

Move-in/move-out checklist: A move-in/move-out checklist saves landlords time and stress by allowing them to assess a property’s condition prior to a tenant moving in and after their lease ends. This document gives them a good overview of any damage done, aside from normal wear and tear, allowing them to make the necessary deductions from the security deposit.

Landlords can use the checklist to gather:

• Photos
• Property descriptions
• Maintenance needs before a tenant moves in and after they move out

Tenant challenge: If a tenant challenges a deposit return, the landlord should prepare documentation by reviewing any before-and-after photos, reviewing the receipts/itemized list of deductions, and talking to the tenant about the charges. When the tenant continues to disagree and takes legal action, the landlord should compile all documentation and be ready for small claims court.