What is the purpose of a security deposit?

The purpose of a security deposit is primarily to cover potential damages to the rental property and any unpaid rent that may occur during the tenant's occupancy. This financial assurance provides landlords with a safeguard against losses that could result from a tenant's actions or failure to pay rent.

When a tenant signs a lease, the security deposit is collected upfront, and it acts as a form of collateral for the landlord. If the tenant leaves the property in poor condition or fails to pay rent, the landlord can retain all or part of the deposit to cover those costs. This includes repairs for damage to the property that exceeds normal wear and tear and any rent that has not been paid by the tenant.

It's important to note that the security deposit is not intended for the landlord's personal expenses, as this would violate the trust inherent in the rental agreement. Furthermore, while it may serve as a deterrent against irresponsible tenant behavior, it is not a primary form of insurance; instead, it provides specific financial coverage for identified risks associated with renting out property. This distinction clarifies the specific purpose of the security deposit in the landlord-tenant relationship.