6 Ways to Avoid Losing Your Security Deposit

About a quarter of renters have lost their security deposit at some point. Here’s how to keep yours.

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The housing crisis caused many consumers to rethink their definition of the American Dream. According to a report released by the MacArthur Foundation earlier this year, 45 percent of homeowners say they would consider renting at some point in the future, citing benefits like increased mobility and less maintenance.

Whether a former homeowner returning to the rental market or a lifelong renter, tenants are often required to pay a security deposit to cover potential damages. In some states, the landlord must keep these funds in a separate, interest-earning account and pay the interest to the tenant.

However, a nationwide survey of 1,000 renters by Rent.com earlier this year found that 26 percent of renters have lost their security deposit at some point. Of those, 36 percent said their landlord offered no explanation about not returning the deposit, which may violate tenants' rights in some states.

Here's six ways to ensure you get your deposit back.

1. Document the property's condition. Many disputes over security deposits occur because the landlord and tenant didn't document pre-existing damage such as stains on the carpet or holes in the walls, so note any damage before you move in. "Mom and pop landlords don't always have the rentals checklists that a well-managed apartment community is going to have," says Bill Deegan, CEO of RenterNation.com, a website that advocates for renters. "They do things informally, and there's a lot that falls by the wayside. That's why it's really important for the prospective resident to take the initiative and document things."

[Read: Tips for Renting Your First Apartment.]

Deegan suggests making sure all appliances work and taking photos of any stains or damage inside and out. If you're renting a single-family home, for instance, you won't want to be charged for a crumbling sidewalk or other exterior damage. He also suggests taking another set of photos after you move out in case the landlord doesn't assess the unit's condition right away. That way, he or she can't charge you for damage that may occur after you leave, Deegan says.

The landlord shouldn't withhold money for normal wear and tear, but if you damage the unit, you may be on the hook for repairs. What's the difference between normal wear and tear and actual damage? "If you have little kids and they're rubbing their hands on the wall, that's normal wear and tear," Deegan says. "If they're punching holes in the wall, that's a different story."

This can also depend on the length of your tenancy. A tenant who lives in an apartment for a few months shouldn't cause much wear, but a tenant who's lived in the unit for several years might be expected to make more of an impact on the apartment's condition, according to Kirk McGary, founder and CEO of Real Property Management, which manages rental properties in 45 states.

2. Discuss expectations with your landlord. Read your lease and make sure you understand your landlord's policies. McGary suggests asking questions like these: "Who's going to shovel the snow? What date is my rent due? Is there a grace period for late payments? Who pays utilities?" Also ask what happens if you need to move out early. "Typically the deposit would be applied to any outstanding monies due, including rent," McGary says. "Any leftover money would be returned to the tenant. However, leases can be written differently, and the lease would govern [that]."

If you're renting a single-family home, you may also be responsible for watering or mowing the lawn or shoveling the sidewalk, and the city or town may fine homeowners who fail to do so. Make sure you follow through on any shoveling or mowing you're expected to handle yourself.

As your move-out date approaches, Kari Taylor, Rent.com's director of rental insights, recommends having a conversation with your landlord to avoid surprises. Frame the conversation this way: "I really want to make sure I get my full security deposit back. Is it required that I caulk and paint, or is that something you require your maintenance team to do?"