Section 250 under Pennsylvania law covers what landlords and tenants need to know about how a security deposit works in relation to a rental agreement.
Here are some of the key points you'll want to know, but make sure to review these laws yourself or seek professional assistance with any specific questions you may have.
1. A Security Deposit Cannot Be More Than 2x The Monthly Rent.
This rule applies to new renters and those who have rented the same location for up to 12 months.
Once a tenant occupies a unit for a second year, the deposit must be reduced to the same amount as the monthly rent.
At month 24, the escrow amount must be returned with interest when the tenant moves out.
2. Security Deposits Are Held In Escrow.
Unlike other states that allow a landlord to co-mingle security deposit funds, Pennsylvania requires all deposits to be held in escrow.
This means that a security bond can act in lieu of of a security deposit as long as the guarantee is issued by a bonding company that is authorized to do business within the state.
3. Any Security Deposit Worth $100 Or More Earns Interest.
Although interest is earned on the amount, there is a fee of 1% taken for administrative costs for holding the account in escrow.
Anything remaining after this fee is then send to the tenant annually on the anniversary of their lease signing.
4. Funds Must Be Returned Within 30 Days.
If a landlord refuses to release escrow funds within 30 days of a tenant moving out, then they forfeit all rights to make a claim on the amount or to sue a tenant for damages caused to the premises.
If claims are made, they must be itemized and sent in writing to the tenant within 30 days or the landlords loses the ability to make a claim.
Any funds not paid within the required period of time also makes a landlord liable for up to 2x the amount that is in question.
By understanding the section of code under Pennsylvania law that deals with security deposits, the relationship between a landlord and tenant has more certainty.
Review these key points today so that you won't be stuck with a financial headache in the future.
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