Collecting a security deposit is one of the most important aspects of the leasing process. Collected at the beginning of a lease term along with the first month’s rent amount and any pet fees, the security deposit serves to protect the landlord from any breach of the rental agreement by the tenant.

How much? What is it used for?

South Carolina landlord tenant law does not impose a maximum amount that can be collected as the security deposit, and there is no statutory requirement to hold the security deposit in a separate account or provide interest on the deposit to the tenant. There is a requirement, however, to disclose how a security deposit amount is determined if the landlord rents more than four adjoining units. In this case, the landlord must disclose the calculation to the tenant prior to signing a rental agreement.

The landlord cannot use the security deposit toward ordinary wear and tear, but instead the deposit is intended to pay for any damage to the premises or grounds caused by the tenant, legal occupants, or guests of the tenant during the tenancy. Other permissible uses for the security deposit by the landlord are for unpaid rent, late charges, and attorney's fees. Finally, some tenants believe they can use the security deposit as the defacto last month’s rent payment, but that is not allowed in South Carolina.

Returning the deposits

Prior to moving out the tenant must give the landlord a forwarding address where the written notice of charges and the deposit can be sent. If the landlord does not receive a forwarding address then the tenant is not entitled to damages that may arise from the landlord’s noncompliance with the return of the security deposit, as long as the landlord had no knowledge of the tenant’s whereabouts and mailed the notice and any amount due to the last known address of tenant.

A written notice of deductions or charges to the security deposit must be provided to the tenant along with any amount due. A best practice for any landlord is to include a Condition of the Premises Agreement at the beginning of a lease term, and then follow that up with a move-out inspection of the premises, preferably with the tenant in attendance. Failing to provide this itemized statement and any amount due the tenant within 30 days from the termination of the rental agreement or surrender of the premises allows the tenant to recover damages equal to up to three times the amount wrongfully withheld, along with attorney's fees.