Pennsylvania Security Deposit Collections & Holdings

Pennsylvania Security Deposit Collections & Holdings

Last Updated: December 12, 2022 by Ashley Porter

Quick Facts Answer
Maximum / Limit Either 1 or 2 Month’s Rent
Receipt Requirement None
Inventory Requirement None
Interest Requirement Only After 2 Years

To learn about laws on security deposit returns in Pennsylvania, click here.

Maximum Security Deposit Allowed in Pennsylvania

Pennsylvania law limits the maximum security deposit to two months’ rent  during the first year and one month’s rent after the first year. For renewals of a lease longer than five years, landlords cannot increase the security deposit even if the rent increases.

Landlords cannot modify these requirements through a lease agreement even if the tenant agrees to waive them.

Can Landlords Charge an Additional Pet Deposit in Pennsylvania?

In Pennsylvania, landlords can collect a pet deposit, except for service animals. However, the total security deposit cannot exceed one month’s rent during the first year and two months’ rent in following years. Landlords cannot exceed the limit by using another name like “pet deposit” or “damage deposit.”

Pennsylvania law does not prevent landlords from adding a monthly pet premium.

How Much Rent Can a Landlord Collect Upfront in Pennsylvania?

Landlords in Pennsylvania can collect the first month’s rent in advance plus two additional months’ rent during the first year of the lease term as a security deposit or future rent.

Pennsylvania case law has established that last month’s rent paid in advance is the same as a security deposit. If a landlord collects the last month’s rent in advance, they can only collect one additional month’s rent for the security deposit during the first year and must credit or return one month’s rent after the 12th month.

Security Deposit Collections in Pennsylvania

While other states have additional requirements for landlords that collect a security deposit, such as providing certain documentation of the condition of the unit at move-in, Pennsylvania does not.

Do Landlords Have to Provide a Receipt for the Security Deposit in Pennsylvania?

Although some states like Washington require a receipt, landlords are not required to provide a receipt for the security deposit in Pennsylvania.

What Obligations Do Landlords Have to Establish the Condition at Move-in in Pennsylvania?

Pennsylvania law does not require landlords to document or establish the property’s condition at move-in. While other states legally require a written inventory of damages to be completed when collecting a security deposit, Pennsylvania does not.

Security Deposit Holdings in Pennsylvania

If the security deposit is greater than $100, Pennsylvania law allows the landlord to choose between holding the security deposit in an escrow account or securing a bond.

Option 1: The landlord may place the security deposit in an interest-bearing or non-interest-bearing escrow account in a bank or institution regulated by the Federal Reserve Board, Federal Home Loan Bank Board, Comptroller of the Currency, or the Pennsylvania Department of Banking.

The landlord must notify the tenant in writing of the name and address of the bank or institution and the exact amount deposited.

Option 2: The landlord may secure a bond from a surety authorized in Pennsylvania.

Are Tenants Entitled to Interest on Their Security Deposit in Pennsylvania?

Tenants are entitled to earn interest on their security deposit after the second year of the lease. The interest must be paid to the tenant every year on the anniversary of the lease. However, the landlord may take 1% of the interest as an administration fee.

How Are Security Deposits Accounted for in Pennsylvania?

Security deposits are not considered taxable income when they are collected.

What Happens to a Security Deposit When the Property is Sold in Pennsylvania?

If a property is sold in Pennsylvania, the seller must transfer the security deposit to the new owner and handle it according to the same rules.

Sources

Security Deposit Collections in Other States