Glossary · DealProp
Security deposit
Money a tenant pays at the start of a lease to secure performance. Held separately from operating funds in many states.
A security deposit is money a tenant pays at the start of a lease to secure their performance under the lease — typically one or two months of rent. It is not the landlord's money. It belongs to the tenant and is held in trust until the tenancy ends.
At move-out, the landlord can deduct from the deposit for unpaid rent, damages beyond normal wear and tear, and unpaid utilities — within whatever the local statute allows. Whatever remains must be returned to the tenant, typically within a fixed window (often 14, 21, or 30 days depending on jurisdiction).
Why it matters
Several U.S. states require security deposits to be held in a separate trust account — not commingled with the landlord's operating funds. Some require interest to be paid to the tenant. Some require the landlord to give the tenant the name of the bank where the deposit is held. Failure to comply can mean forfeiture of the deposit, statutory damages, or both.
Even in states without a separate-account rule, most landlords and PMs keep deposits separate as a matter of trust and to avoid spending money that is not theirs.
In DealProp
DealProp routes security deposits to a separate ledger automatically. In deposit-law states, that ledger represents a separate merchant account funded only by deposits and refundable to tenants on move-out. You can audit every deposit movement from any transaction back to the source.