Security deposits in Pennsylvania are regulated by Pennsylvania Statutes, Title 68, § 250.511a - c and § 250.512. Certain municipalities may have local laws that supplement state regulations. To ensure full compliance, verify the regulations applicable in your area.

Maximum Security Deposit

During the first year of a lease, landlords/property managers may collect a security deposit up to two months’ rent. During the second and subsequent years of the lease, however, landlords/property managers can only require a security deposit of one month’s rent. 

Holding & Interest Requirements

If the landlord/property manager increases rent during the second through fifth year of the lease, they can increase the security deposit to match one month of the new rent amount. After the fifth year, the security deposit cannot be increased.

Holding Requirements: If more than $100 is collected as a security deposit, the security deposit must be placed in a separate escrow account in an institution regulated by the Federal Reserve Board, Federal Home Loan Bank Board, Comptroller of the Currency, or Pennsylvania Department of Banking. After the second year of the tenancy, the security deposit must be held in an interest-bearing account.

In lieu of holding the security deposit in an escrow account, landlords/property managers may secure a bond issued by a bonding company authorized to do business in Pennsylvania.

‍Interest on Deposits: Landlords/property managers are not required to pay interest on security deposits for the first two years of a lease. However, if a lease continues beyond the second year, the security deposit must be placed in an interest-bearing account. Accrued interest must be paid to the tenant (less a 1% administrative fee) annually.

Information Provided to Tenant: After placing a security deposit in an escrow account, landlords/property managers must notify the tenant in writing of the name and address of the institution in which the security deposit is held, and the amount of the security deposit.

Deposit Refunds

Timeline: Within 30 days after the tenant vacates the property, the landlord/property manager must either (1) return the full security deposit and accrued interest (if applicable) to the tenant, or (2) provide the tenant with a written list of any deductions to the security deposit together with the portion of the security deposit and accrued interest (if applicable) being returned.

Permissible Deductions: Landlords/property managers may deduct the following from security deposit funds:

• Unpaid rent
• Damages beyond normal wear and tear
• Damages caused by the tenant’s noncompliance with the lease

Documentation of Deductions: Pennsylvania state law does not require any specific documentation or level of detail to be included in the itemized notice of deductions to the security deposit.

‍Penalties for Violations: Failure to return the security deposit and accrued interest (if applicable) or provide the written list of deductions as required by Pennsylvania state law may result in the landlord/property manager being liable for up to 2x the amount of the security deposit, plus attorney’s fees and court costs if the tenant wins in a lawsuit. However, if the tenant does not provide a forwarding address upon vacating the property, the landlord/property manager is relieved of liability for not returning the security deposit and accrued interest or providing a written list of deductions.