Editor: David Reiss
Brooklyn Law School

January 16, 2018

Using Your Security Deposit for Rent

By David Reiss quoted me in Can You Use Your Security Deposit as Last Month’s Rent? Find the Answer Here. It opens,

Can you use your security deposit as last month’s rent? This question is common among tenants vacating their apartments, and for very good reason: When you first moved in, you probably forked over a sum (typically amounting to one month’s rent) to cover any repairs that might be required on your place once you move out. Typically this deposit is returned once the landlord sees you’ve left the place in decent shape. So what’s the harm in having that deposit serve as your final rent payment so you can simply move on without all that back-and-forth?

In many ways, using your deposit as last month’s rent makes perfect sense: You won’t have to pester your landlord for the deposit, while your landlord won’t have to mail it back. Still, while this happens all the time and rarely causes repercussions, this practice can come with risks.

Using your security deposit as last month’s rent: What could go wrong?

“Tenants should check their lease, but there is a good chance it will say that it is not okay to do this,” says law professor David Reiss, research director for the Center for Urban Business Entrepreneurship.

The reason is simple: “The landlord wants the security deposit to cover, among other things, damage to the property,” Reiss explains. “If the security deposit is used for last month’s rent, it will no longer be available for any other purpose.”

If you leave your apartment in good condition, then your landlord is unlikely to care much. However, if you leave the apartment in poor shape and there is no security deposit left to bring it back up to snuff, then your landlord might come after you to cover the cost of repairs.

Where you live, and the local laws there, can also affect how landlords react.

“You will want to know the law as it applies in your jurisdiction,” says Reiss. “Note, for instance, that the New York State Division of Housing and Community Renewal states that ‘a security deposit should not be used as a final month’s rent.'” This means landlords could easily sue you for breaching the terms of your lease.

That being said, “practically, the landlord can’t do much in the 30 last days of your lease term,” says Reiss. “No court would move fast enough.” But that doesn’t necessarily mean you’re in the clear.

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