Pennsylvania Security Deposit Laws for 2024 | Deductions, Returns, & Rights

The Pennsylvania Landlord and Tenant Act, Sections 250.511a to 250.512, governs the collection and repayment of security deposits in Pennsylvania. Landlords and property managers must adhere to these regulations in order to ensure the safety of all parties involved in the lease agreement.

But, before we dive into what those are…

Download the Landlord’s Guide to Security Deposit Laws Whitepaper

Get the quintessential guide to security deposit laws on the go from DoorLoop’s “Landlord’s Guide” series. 

‍Click here or on the banner above to download the whitepaper and get all our best tips for collecting and managing security deposits (by the book).

Now, let’s dive in. 

Maximum Deposit

A security deposit in Pennsylvania may not exceed two months' worth of rent. The landlord is only permitted to request one month's rent as a security deposit for leases that are extended after the first year. Even if the rent increases, the landlord may not increase the security deposit amount for lease extensions lasting more than five years. Furthermore, if a tenant wants to waive them, these restrictions still stand. However, these restrictions only apply to residential property.

Allowable Deductions

The landlord is only allowed to make deductions from the security deposit once the lease has ended or been canceled. Additionally, the tenant's security deposit may only be used for:

1. The cost of any damage to the rental property.
2. Unpaid rent.
3. Any breaches in terms of the rental agreement.

Deposit Holdings

The landlord needs to do one of the following if the security deposit is more than $100:

1. The security deposit could be held by the landlord in an interest-bearing or non-interest-bearing escrow account at a bank or other establishment governed by the Federal Home Loan Bank Board, Federal Reserve Board, Pennsylvania Department of Banking, or Comptroller of the Currency:

• Security deposits over $100 must be placed in an interest-bearing escrow account if the lease is renewed after the first two years and the security deposit is in an interest-bearing account. The interest accrued on such an account will be paid to the lessee annually on the anniversary of the lease and will belong to the tenant. However, as an administrative fee, the landlord is permitted to retain 1% of the security deposit.
• The landlord is required to inform the tenant of the name and address of the bank or other organization where the security deposit has been placed as well as the exact amount that has been put there before placing the deposit in escrow. There must be written notice of this.

2. The landlord may obtain a bond from a surety company authorized in Pennsylvania with the condition that at the conclusion of the lease, the landlord will restore the security deposit to the tenant less any permitted deductions.

Tenant's Obligations

Only if the tenant's breach of a specified obligation resulted in the damage, may the landlord recover the cost of repairs. The following requirements must be met by the tenant in order to comply with the specified rule:

1. The structure or housing unit, as well as any amenities, equipment, or appurtenances, may not be damaged, defaced, removed, or impaired in any way by the tenant's invited visitors.
2. Not remove any portion of the building or housing unit, along with any associated amenities, equipment, or facilities, knowingly or carelessly.
3. Not allow anyone on the property to knowingly or wantonly interfere with other tenants' or neighbors' pleasant enjoyment of the space.

Returning Deposit

Time Frame

The security deposit and any unpaid or uncredited interest must be returned by the landlord to the tenant within 30 days after the end of the lease or the day the tenant vacates the property, whichever comes first. If the landlord plans to deduct money, they must also give the lessee a written list of the deductions and restore any remaining security deposit funds within the same time limit. The landlord shall be released from all liability if the tenant fails to give the landlord a forwarding address in writing.

Penalty for Failure to Return the Security Deposit on Time

The amount withheld from the lessee, which is the difference between the security deposit plus interest and the entire amount of permitted deductions, may be doubled if the landlord fails to restore the security deposit or what is left of it. Small Claims Court, commonly known as "Municipal Court" in Philadelphia or "Justice Court" throughout the rest of Pennsylvania, allows tenants to file lawsuits for up to $12,000.

Penalty for Failure to Provide the Written List

Landlords forfeit all rights to security deposits or any portion of them, as well as the right to bring legal action against the tenant for property damage, if the landlord does not provide the written list of deductions or claims on the deposit within 30 days of terminating the tenancy.

Additional Rules

Failure of the Tenant to Provide a Forwarding Address

The landlord will be released from all responsibility for the security deposit and its accounting if the lessee fails to give the landlord a forwarding address.

Receipt Requirements

Under Pennsylvania security deposit laws, the landlord is not required to give the tenant a receipt for the tenant's deposit.

Security Deposit Interest

It is not usually required by Pennsylvania law to pay interest on security deposits. Only when the security deposit is deposited in an interest-bearing escrow account is the landlord obliged to pay interest on the amount. Only when the lease is extended or renewed after the first two years and the security deposit is greater than $100 is it necessary to put the tenant's deposit in an interest-bearing account.

When a lease expires or is relinquished and accepted for the leasehold property during the third year of the agreement, the landlord is entitled to one month's rent as escrow. The tenant will receive a refund of the escrow money plus interest. Any increase in rent shall not necessitate an increase in the security deposit if the tenant has occupied the property for five years or more. Keep in mind that this only applies to residential units.

The Bottom Line

The key to becoming a successful Pennsylvania landlord is having a solid understanding of Pennsylvania security deposit laws. You also need to be aware of the legal eviction procedure, landlord-tenant laws, lease or rental agreement law, and any other rental rules. This will ensure that you are able to maintain a positive relationship with your tenants.

‍

Webinar

DoorLoop hosted this webinar with attorney Gregory J. Spadea, Esquire from The Law Offices of Spadea & Associates, LLC to help answer many of your legal questions. Gregory specializes in real estate law and evictions in Pennsylvania and we covered:

1. Landlord-tenant issues and laws
2. Grounds to evict a tenant
3. Eviction process
4. Preventing delays or fines
5. Hiring an Attorney vs DIY
6. Post COVID legal changes

Feel free to learn more and watch this webinar for free.