What is a security deposit in a real estate transaction?

A security deposit in a real estate transaction is money held by either the landlord or tenant that is intended to cover potential damages to the rental property. In the District of Columbia, security deposits are capped at the equivalent of one month’s rent. A landlord will collect a security deposit from a tenant prior to the tenant occupying the property. As per the law, the landlord must then retain the security deposit until the tenant vacates the premises and proves that there is no damage beyond normal wear and tear. Should there be any damage to the property beyond normal wear and tear, the landlord can use the security deposit to repair the items, provided that the landlord has documented the damages. The tenant is then responsible for paying the landlord whatever additional amount is required to cover the cost of repair. At the end of the tenancy, the landlord is legally obligated to refund any remaining balance of the security deposit to the tenant, minus any deductions for damages identified by the landlord. The tenant also has the right to inspect the unit prior to vacating the premises in order to compare the current condition against the initial condition. If there is a disagreement between the landlord and tenant regarding the condition of the property, the tenant has the right to file a complaint with the District of Columbia Office of Tenant Advocate.

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What is a security deposit in a real estate transaction?

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