Security Deposit Myths Debunked! - Tenant Resource Center

Security Deposit Myths Debunked!

Around Wisconsin, many leases end during the warm months - the months in which it's not too likely to be snowing, icing or raining.  Which means that autumn, along with the beginning of school, is security deposit season.

For the thousands of Madison renters who left their previous rental on August 15, security deposits (or the explanation of how they have been used) are supposed to get to former tenants on September 6. For many tenants, receipt of this letter is an unhappy surprise. 

For the tenants out there, we are debunking the myths that many people have about security deposits - click through to make sure you are as well informed as possible.

Before we begin: we have pages detailing how security deposits work. If you're new to this, check out our informational pages first! Here is Security Deposits in Madison & Fitchburg, and Security Deposits in Wisconsin.

Myth #1: There are no rules about what a landlord can deduct from a security deposit. 

This is SOOOO untrue. Some folks think that with the recent law changes, all regulations about security deposits have been lifted, and that's absolutely false. According to ATCP 134.06, landlords can withhold for:

  1. Unpaid rent
  2. Unpaid utilities
  3. Damage, waste or neglect of the property done by the tenant/tenant's guests
  4. Unpaid mobile home parking fees
  5. Other deductions allowed in a lease's Nonstandard Rental Provisions

Also, landlords cannot withhold for "normal wear and tear."

Myth #2: If the landlord doesn't return a security deposit within 21 days, then the tenant gets the whole amount back.

This is not true. A landlord is supposed to return a security deposit or a list of deductions within 21 days after a lease ends or a new tenancy begins on the premises, whichever is first. If a landlord doesn't return the security deposit or a list of deductions within 21 days from that point, then the tenant can begin to take action against the landlord, but doesn't automatically get the whole amount back. Here are the steps we recommend:

  1. Keep a copy of everything that's sent to you: You can cash the partial check (maybe make a copy?), but make sure to keep the envelope it came in, and the letters that your landlord sends about the status of your security deposit, or the deductions that they are taking. (ATCP 134 changes effective 11-1-2015)
  2. Write a letter. Imagine that a judge is the one who is reading it, and be polite. Some helpful tools from our website include: our blog post on How to Write a Letter, and templates for disputing a security deposit (in pdf form, and fill-in Word form).
  3. File a complaint to Consumer Protection. The Department of Agriculture, Trade and Consumer Protection has some capacity for mediation and enforcement of security deposit laws, and so if the laws have been violated, you can make a complaint to them. Their complaint form is here, and is free.
  4. Sue in Small Claims Court. If your landlord has charged you incorrectly, and you aren't able to work it out, then you can sue in small claims court for double the amount wrongfully withheld, plus court costs and reasonable attorney's fees. Here's a post of Small Claims Court tips, to help. Also here's how you calculate double damages: If you paid $1000 worth of security deposit, and the landlord charged you for $800 in bogus damages, then you can sue for $800 x 2 = $1600, and ask that the awarded amount (if a judge grants it) include court costs ($94.50 + service) and reasonable attorney's fees (scale is here).

Myth #3: Nonrefundable deposits are nonrefundable. 

I know it sounds like we're crazy people here, but really, THERE IS NO SUCH THING AS A NON-REFUNDABLE SECURITY DEPOSIT. All upfront fees must be accounted for under security deposit law (ie, the only allowable deductions are those listed under Myth #1). This means that there are no such thing as: non-refundable pet deposits, non-refundable key deposits, non-refundable carpet deposits, etc.

Here's why: The definition of a security deposit under ATCP 134.02(11) is, "the total of all payments and deposits given by a tenant to the landlord as security for the performance of the tenant's obligations, and includes all rent payments in excess of 1 month's prepaid rent." This means that, after the rent that you pay in order to live there for the first month, ALL of the rest of the money that you pay upfront has to be treated like a security deposit. Period. And if there are pet deposits or key deposits, they have to be treated like a deposit, or else you can sue for double the amount wrongfully withheld in small claims court.

Myth #4: Landlords can charge for routine carpet cleaning. 

Nope, they can't charge for routine carpet cleaning. They can't charge for routine maintenance of any kind. They can't charge for "normal wear and tear." (Our post explaining "normal wear and tear" is here).

Landlords can, of course, charge for damage that a tenant causes, so if a tenant damages the rental to the degree that carpet cleaning or painting becomes necessary, then it's legal for tenants to be charged. 

Myth #5: Landlords are only allowed to charge the tenants the amount of the security deposit, not more.

Alas, no. If a tenant paid $1000 for a security deposit, but did $1200 worth of damage, and owes $900 worth of rent, then the landlord can withhold the security deposit, and send a bill for another $1100. A surprising number of tenants come in thinking that they can't be charged anything beyond the security deposit, and that's simply not true.

If a tenant is billed for an amount they they think they don't owe, beyond the security deposit, they should

  1. Make sure they don't owe that amount, not a penny. If some of the charges might stick, we recommend paying those.
  2. Write a dispute letter, explaining why the charges are incorrect.
  3. Wait to be sued. Since the extra amount isn't covered by security deposit laws (it's not a deposit), there isn't a complaint process. The most tenants can do is make sure that they are blameless, and then prove that in court. Small claims court tips are here.

Myth #6: Landlords are perfect and fair.

They're not. Some tenants take a landlords' withholdings very, very personally, and seem shocked to find out that landlords are human beings capable of making mistakes. Landlords and managers are human, they might be misinformed about the law, they may have mixed up the security deposit with a neighbors... there are many possible ways to become confused about these rules.

We always encourage tenants to start with the assumption that a landlords' deductions from a security deposit were an error based on faulty information. Do your best to correct and explain the situation before taking it to court or making a complaint, and your chances of success are much higher.

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