When renting apartments, landlords routinely require a security depot from tenants in order to pay for any possible damages that might occur to the property.
Depending on which state or city you live in, you may be entitled to interest on your security deposit. Although it is only required in a minority of locations, some jurisdictions mandate that your landlord place your security deposit in an interest bearing account and pay you interest at set intervals.
The interest rate will likely be a small amount around .05 – .15%. Depending on your jurisdiction’s laws you may be entitled to shop around different banks and see what types of interest bearing accounts are available.
Some jurisdictions require that the landlord provide notice of where your deposit is being invested and what interest is being accrued. Alternatively, you can always ask your landlord.
Some jurisdictions go even further and require that the security deposit be placed in an account separate from the landlord’s funds. If your landlord co-mingles your security deposit with their own funds they may be subject to penalties depending on the laws in your jurisdiction.
Jurisdictions generally specify at what intervals interest must be paid. Although the frequency may vary, annual payments are common.
Depending on the jurisdiction, you can often choose between cash payment and rent credit. Though some jurisdictions allow landlords to use some interest amounts for administrative expenses related to your tenancy.
These security deposit laws are prevalent in major U.S. cities such as Chicago, Los Angeles, San Francisco, and New Jersey. However, as noted they are only available in a minority of areas and vary by jurisdiction. Thus, to find out your security deposit rights, it is best to research the local laws in your area or contact a real estate attorney for assistance.