Understanding South Carolina Security Deposit Laws
Whether a property management company is involved, it’s important for those who are new to owning rental properties in South Carolina to understand the state’s statutes governing tenants’ security deposits. Rental property owners need to have a policy regarding security deposits and discuss security deposit issues with tenants and property managers. That policy must be consistent with the law. Find out how security deposit laws work in the state of South Carolina below. Or see our owner services here, to find out how we can help you as an expert in property management and the laws that surround it.
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Are Security Deposits Mandatory in South Carolina?
There is no state law mandating security deposits from tenants, but the vast majority of rental property owners in South Carolina require one from every tenant. This requirement is spelled out in the terms of the lease or rental agreement between a landlord and tenant.
Why Are Security Deposits Required?
As the name suggests, a security deposit provides financial protection for the property owner in the event that:
- The tenant vacates the apartment (or rented house) before the end of the lease period without paying rent for the months remaining on the lease, and/or
- Causes damage beyond what would be considered normal wear and tear
Even with a security deposit, the amount may not be large enough to fully cover the lost rent or cost of repairs. When the security deposit does not cover the cost of repairing damage from a tenant, the property owner can take legal action against the tenant to recover the remaining balance of the repair cost.
Is There a Limit to the Security Deposit Amount?
The South Carolina statutes governing tenant security deposits do not place a floor or a ceiling on their amount. The only statutory requirement is when a security deposit is a condition for signing a lease or rental agreement, the amount must be reasonable. However, there may be limits at the local level.
What Is Considered a Reasonable Security Deposit?
Most property owners who require a security deposit set the amount at the equivalent of one or at most two times the monthly rent. The tenant could challenge anything more than that as unreasonable.
Can the Security Deposit Be Different for Different Units?
By state law, landlords can set different security deposit amounts for different apartments. However, if there are different security deposit requirements for four or more adjacent and comparable apartments, tenants must be notified and given an explanation as to why.
Tenants understand the deposit for a one-bedroom unit might be less than the deposit for a two-bedroom apartment. But setting different security deposit amounts for adjacent apartments of the same size would be hard to justify unless there were other significant differences in the two units.
Must Security Deposits Be Held in Interest-Bearing Accounts?
According to South Carolina law, property owners do not have to pay tenants interest on their security deposits. And there is no requirement for those deposits to be held in escrow or in segregated accounts. They can be commingled with other funds.
The South Carolina code doesn’t even require landlords to provide a receipt for tenants’ security deposits. However, it would be foolish not to document the receipt of security deposits. A paper trail can make the difference between winning and losing if you ever end up in court over a tenant’s dispute.
How Long Do I Have to Return a Tenant’s Security Deposit?
Under South Carolina Law, the security deposit must be returned to a tenant within 30 days of the apartment being vacated. Failure to do so can result in a fine of up to three times the amount of the deposit, plus court costs.
The security deposit must be mailed to the last address provided by the tenant. If the tenant did not provide a forwarding address, and there is no other address on file, the landlord need not return the security deposit.
What Can I Deduct from a Tenant’s Security Deposit?
The full security deposit must be returned, less any deductions for rent still owed or for repairing damage caused by the tenant beyond normal wear and tear. Examples of such damage include:
- Damage due to misuse of appliances, such as dented front panels, broken shelves or handles, missing knobs, etc.
- Dryers damaged by failure to clean lint traps
- Cracked or missing bathroom or countertop tiles
- Torn or stained carpeting
- Missing or damaged window shades or blinds
A detailed list of all deductions must accompany the deposit. If the deductions exceed the security deposit amount, the tenant must still receive a statement itemizing the deductions and showing the balance owed by the tenant.
Can I Delegate Responsibility for Security Deposits to a Property Manager?
Property owners often delegate collecting, holding, and returning security deposits to their property managers. Such responsibilities need to be made clear at the time they hire a property manager or property management company.
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