Finding homes for rent can be a tricky business—but the real challenge usually comes when it’s time to move.
When you’re getting ready to end that lease, you’ll probably come up with a lot of important questions, one of which being: 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.
Why you shouldn’t leave your landlord in a lurch
Still, even if the courts don’t catch up with you, there are other ways a landlord can haunt you long after you’ve moved out. For instance: If a new or prospective landlord asks to speak with your previous landlord and hear what kind of tenant you were, it won’t bode well if you just bailed without a trace. This could make new landlords leery of welcoming you as a tenant, which could complicate your plans to find a new place.
Plus if your old landlord does file a lawsuit, that could show up on a credit report—further damaging your plans to rent or buy a home down the road.
How to get your security deposit back the right way
Afraid you’re not going to get your security deposit back and using that as your rationalization for counting it as your final month’s rent? Actually, you’re protected there because the landlord is required to give you back your security deposit if you leave the rental without major damage. If they don’t, you may then take the issue to small-claims court yourself, or file with the Consumer Frauds and Protection Bureau.
Bottom line: A security deposit is not supposed to be rent money, so unless you’re really in a bind, keep them separate—whatever money you save might not be worth the potential repercussions.