Renting a home? what you need to know about security deposits

If you are considering renting a home,  or considering leasing a property that you own, you should be aware of state laws in Connecticut regarding security deposits. The following information is excerpted from the Connecticut Department of Banking

• What Is A Security Deposit?  A security deposit is any advance rental payment other than an advance for the first month's rent or a deposit for a key or any special equipment. A security deposit remains the tenant's property but the landlord holds a security interest in it. Security deposits must be kept in an escrow account in a Connecticut bank. ( The interest rate on security deposits is 1.5%.)

• How Large A Security Deposit Can A Landlord Require? Landlords can't require more than two months rent as a security deposit. This limit is reduced to one month's rent if a tenant is 62 years of age or older.

• Do Landlords Pay Tenants Interest On Security Deposits? Yes. Landlords must pay tenants interest on security deposits of at least the average commercial banks savings deposit rate as annually determined and published by the Banking Commissioner. Interest must be paid annually on the anniversary date of a tenancy either directly to tenants or as a credit towards the next month's rent.

• What If A Tenant Is Late Paying Rent? Tenants forfeit interest on their security deposits for any months when they are more than ten days late paying their rent. The only exception is when a tenant's rental agreement already contains a late charge for overdue rental payments.

• When Do Landlords Have To Return Security Deposits? Landlords must return security deposits with interest or give tenants written notice of damages being claimed within thirty days of when tenants move. The only exception is if a tenant fails to provide a written forwarding address: landlords then need not return security deposits or provide a notice of damages until fifteen days after receipt of a forwarding address in writing. If a landlord does not return a security deposit with interest or provide a written notice of damages within these statutory time limits, the landlord may have to pay the tenant twice the amount of the security deposit. Tenants may pursue this remedy in court. For further information, see the section on options for resolving disputes. A landlord's written notice of damages must itemize the nature and amount of tenant damages, including any unpaid rent or utility payments, and must be accompanied by the balance, if any, of the tenant's security deposit not being claimed for damages plus interest.

If you are considering renting a home, or leasing a property that you own, contact me. I offer both Tenant representation  and Landlord representation  as well as buyers and sellers.

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