Specifics of Security Deposit statutes in Pennsylvania
8/9/2016 | Real Estate Blog
Prospective landlords and tenants are both well-served to familiarize themselves with Pennsylvania’s basic statutes concerning the proper handling of security deposits. When it comes to lease conflicts, most of them come back in some way or another to disputes about a security deposit (or lack of one). While the statutes offer a great deal of flexibility to creators of leases regarding how security deposits must be handled, there are some clearly defined guidelines that will help both tenants and landlords stay within the reasonable boundaries of good practices.
Security deposits are not allowed to exceed more than two months’ rent during the first year a tenant is renting, and not more than one month’s rent in subsequent years. Upon the ending of a lease, a landlord has 30 days to return the security deposit to the tenant, from either the lease’s termination date or the date when the premises are turned over and found acceptable, whichever occurs first.
One provision that many tenants are unaware of is their entitlement to interest accrued on their security deposit. A tenant is entitled to accrued interest following the second anniversary of making a deposit. Likewise, a landlord is entitled to administrative expenses, which may be calculated as one percent of the deposit, paid out annually. Furthermore, any deposit which exceeds $100 in value and is held for a period of time exceeding two years must be held in an escrow account federally or state-regulated institution.
Lease terms can become complicated before they are even agreed to if both the landlord and prospective tenant do not understand their rights and obligations. The assistance of a qualified real estate law attorney can help steer either party clear of these potential pitfalls.