Deposit and Liability Clauses Explained

Deposit and liability clauses in a lease define your money and your risk. The security deposit is the sum you pay upfront—often one or two months' rent—that the landlord holds against unpaid rent, damage, or other costs. Liability and indemnity clauses say what you're on the hook for if something goes wrong—e.g. injury to a guest, damage you cause, or claims against the landlord. If you don't read carefully, you might not know what can be deducted from your deposit, when you get it back, or that you've agreed to "indemnify" the landlord for things that aren't your fault. Here's a plain-language guide to what these clauses usually mean and what to look for before you sign.

Security deposit

The security deposit is one of the biggest sums you'll hand over when you rent. Understand what it's for, what can be deducted, and when you get it back.

What it's for

To cover unpaid rent, damage beyond normal wear and tear, and sometimes cleaning (if you leave the place dirty) or key replacement. Normal wear and tear—the natural deterioration from living in a place (e.g. faded paint, worn carpet)—is usually not chargeable. The landlord can't keep your deposit for that. But they can deduct for: rent you didn't pay, damage you or your guests caused (e.g. broken window, hole in wall), excessive dirt or damage that requires professional cleaning or repair, and sometimes other costs (e.g. legal fees if they had to evict you)—if the lease allows and local law permits.

Common issues

(1) No clear list of what can be deducted. The lease says "security deposit may be used for cleaning, repairs, and other costs" with no detail. So "other" can mean almost anything—and you may not know what to expect when you move out. (2) No requirement for an itemized statement. When you move out, the landlord might just send a check for less than your deposit—or nothing—with no breakdown. You don't know what they deducted or whether it's fair. (3) Long delay before return. Some leases don't say when the deposit (or balance) must be returned. In many places the law sets a deadline (e.g. 21 or 30 days); the lease should still spell it out. (4) Deposit not in a separate account. In some places the landlord must hold the deposit in a separate account (and may have to pay you interest). If the lease is silent or says the landlord can mix it with their own money, check local law—you may have more protection.

What to look for

• Maximum amount. In many places the deposit is capped by law (e.g. 1 or 2 months' rent). The lease shouldn't ask for more than the law allows.
• Written condition at move-in. It helps to have a written record (or photos) of the condition when you move in—so you can dispute deductions for "damage" that was already there. Some leases or local laws require a move-in inspection or checklist; if so, fill it out and keep a copy.
• Itemized deductions at move-out. When you leave, the landlord should give you a written list of deductions with amounts—and return the rest within a set period. If the lease doesn't say this, ask for it—or check local law, which may require it anyway.
• Deadline for return. How many days does the landlord have to return the deposit (or balance)? 14, 21, or 30 days? Know the deadline. If they miss it, you may be entitled to the full deposit back (in some places) or to interest or penalties. The lease should say—and local law may set a minimum.
• Normal wear and tear. The lease should say (or local law may say) that normal wear and tear cannot be charged. If the lease says you're responsible for "all wear and tear," that's a red flag—push back or get advice.

Liability and indemnity

Liability and indemnity clauses say what you're on the hook for if something goes wrong—e.g. if a guest is injured in the unit, or if you cause damage to the building, or if someone sues the landlord and claims you're responsible.

What it is

You may be asked to "indemnify" or "hold harmless" the landlord for certain claims—e.g. injury to guests or visitors, damage you cause, or your breach of the lease. That means you agree to reimburse the landlord (or their insurer) for losses, damages, or legal costs arising from those things. So if your guest slips and falls in the unit and sues the landlord, the clause might say you have to reimburse the landlord for what they pay. Or if you cause a fire and the building is damaged, you might have to pay for the damage.

Why it matters

Broad language can make you responsible for things that aren't your fault—e.g. building defects, landlord negligence, or injuries caused by the landlord's failure to maintain the property. For example, if the staircase is unsafe because the landlord didn't fix it, and a guest falls, you shouldn't be on the hook for that—the landlord should be. But the lease might say you "indemnify the landlord for any claims arising from or related to the premises." That could be read broadly. In many places, the law limits how much a tenant can be required to indemnify the landlord—e.g. only for your negligence or your breach of the lease, not for the landlord's negligence. The clause may still be written broadly. You should understand what you're agreeing to and whether local law limits it.

What to look for

• Liability limited to your negligence or breach. You should only be on the hook for things you control—your negligence (e.g. you left water running and caused a flood), your breach of the lease (e.g. you had a pet when the lease said no pets and the pet caused damage), or damage you or your guests cause. You shouldn't be on the hook for the landlord's failure to maintain the property, the landlord's negligence, or building defects.
• Push back on broad clauses. If the lease says you indemnify the landlord for "any and all claims" or "any claim arising from or related to the premises," that's too broad. Ask for it to be limited to your negligence, your breach, or damage you cause. Many landlords will agree—or local law may limit it anyway. If they won't narrow it, get advice.

Insurance

The lease may require you to carry renter's insurance. That's often reasonable—but understand what it covers and what it doesn't.

Renter's insurance

The lease may say you must have renter's insurance—to cover your belongings (e.g. if there's a fire or theft) and sometimes liability (e.g. if a guest is injured and sues you). That's reasonable: it protects you and sometimes the landlord (e.g. if the policy names the landlord as an additional insured). Check: What coverage is required? How much (e.g. $100,000 liability)? Does the lease say you must name the landlord as an additional insured? If so, that's common—the landlord wants to be covered if a claim is made against them for something you did. But make sure you're not waiving claims against the landlord where the law doesn't allow it. For example, if the landlord's negligence causes a fire and your belongings are destroyed, you may have a claim against the landlord. The lease shouldn't say you waive that claim—and in many places you can't waive it anyway. Read the insurance clause and ask the landlord or get advice if something is unclear.

BeforeYouSign can pull out deposit, liability, and insurance language from your lease so you can review and ask questions before signing.