South Carolina Security Deposit Laws for 2024 | Deductions, Returns, & Rights

South Carolina uses the SC Code 27-40-410 to regulate the return and collection of security deposits. These security deposit laws provide South Carolina landlords and property managers with a set of rules to follow to protect everyone's rights. Let's learn more about them!

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Maximum Charge

There's no limit to how much landlords can charge for South Carolina security deposit amounts or pet fees if it is stated in the lease or rental agreement. Generally, landlords charge one to two months' rent for the security deposit. However, city and county laws might have set caps for security deposit amounts allowed on residential properties.

Under South Carolina law, landlords can ask for a pet deposit on top of the security deposit. However, service animals for people with disabilities are exempt from the fee. The landlord cannot discriminate against the tenant or make them pay extra for having the service animal.

Still, if the service animal causes any damage to the rental unit, the tenant must pay for them.

Allowable Deductions

The landlord can use the appropriate security deposit amount to make deductions once the tenant leaves the premises. This might happen through eviction because the tenant didn't:

• Comply with building and housing codes
• Keep everything safe and clean, including plumbing fixtures
• Didn't dispose of garbage in a safe manner
• Conduct themselves in a way that didn't disturb other tenant's peaceful enjoyment

Once that happens, the security deposit can cover:

• Cost of damages (if the tenant failed to comply with their obligations and the issues weren't standard wear and tear)
• Unpaid rent (if the tenant fails to pay rent according to the lease agreement)

The deposit can be used for the last month's rent, but only if both parties have agreed in the lease agreement. Otherwise, it must be handled separately from the outstanding rent balance owed.

Normal Wear and Tear

Normal wear and tear is considered deterioration that happens from regular use of the rental unit without carelessness, negligence, accidents, or abuse of the rental property by the tenant and guests. This includes minor problems, such as:

• Fading wall paint
• Gently worn carpets
• Stained bath fixtures
• Loose door handles
• Dirty grout
• Lightly scratched glass

Damage, on the other hand, focuses on the destruction of the rental property that happens from abuse and negligence. It must affect the value, usefulness, and normal functionality of the unit. This includes:

• Missing fixtures
• Broken windows
• Holes in the wall
• Broken tiles
• Pet damages
• Ripped or heavily stained carpet

Returning Deposits

The South Carolina landlord has only 30 days to return the unused portion of the security deposit amount and must include an itemized list of the damages deducted. That period starts on the date of termination outlined in the rental agreement or when the tenant demands it be returned.

The tenant must give the landlord a forwarding address in writing. That forwarding address is used to send the South Carolina security deposit back to the tenant. However, if it's not provided, the landlord should mail it to the tenant's last-known address.

If the landlord fails to return the tenant's security deposit during the 30-day limit, the tenant can recover triple that withheld sum, along with reasonable attorney's fees for going to court. The fine for the landlord could be up to $7,500.

Tax Filing

Whether the tenant's security deposit is treated as taxable or not will depend on if it's returned or used.

Security deposits aren't automatically called income once they're collected at the start of the tenancy. They're only considered taxable income once the landlord has no obligation to refund them. However, they could be used as tax write-offs.

It depends on how the security deposit is applied or how it's used to determine if it should be reported as taxable income and when. The IRS uses these simple rules:

1. If the deposit was forfeited because of a breach in the rental agreement or used for unpaid rent, the amount must be declared as income during the year it was applied.
2. If that security deposit covered expenses chargeable to it, the landlord must include the part used as income if it includes repair costs. However, if the landlord doesn't do that, there's no need to add it.
3. If both parties agree to use the security deposit or parts of it for the final month's rent, the landlord must include it as income once received.

Additional Rules

Here are a few more things to understand based on the South Carolina Landlord-Tenant rules:

• Receipt Requirements - The landlord doesn't have to give a receipt for the security deposit.
• South Carolina Security Deposit Holdings - South Carolina law states that landlords don't have to hold security deposits in separate accounts from other funds.
• Interest for the Security Deposit - South Carolina laws don't require landlords to give interest on the held security deposits.
• Inequality for the Security Deposit - If the South Carolina landlord rents four adjoining units or more with different security deposit needs, they must disclose the standards for calculating that security deposit amount collected. This should be part of the lease agreement. However, if the landlord doesn't provide written notice, the difference between the lowest security deposit and proposed amount charged cannot be used as deductions when the tenancy is terminated.
• Fire or Casualty Damage - If the rental property is destroyed or damaged by fire and is significantly impaired, the landlord must return the security deposit. However, they can withhold the tenant's security deposit if the casualty or fire happened because of the tenant's negligence.
• New Owner Responsibility - If or when the original landlord sells or transfers ownership to another, they must return the security deposit to the tenant or transfer that amount to the new owner, notifying the tenants of the new person's address and name.

Conclusion

You now have a general overview of the security deposit law in South Carolina. As the landlord of the property, you must stay updated on all landlord-tenant laws and understand the eviction process.

Understanding the South Carolina security deposit laws will help you charge appropriate amounts and return the unused funds according to the rules. If you have a dispute with the tenant, you may need to go to small claims court to resolve them.