Can landlords charge non-refundable security deposits?

Understanding Non-Refundable Security Deposits for Tenants in New Hampshire

When renting a property in New Hampshire, tenants often encounter the term "security deposit." This financial requirement is meant to provide landlords with a form of protection against damages, unpaid rent, or breaches of the lease agreement. However, there is sometimes confusion surrounding whether a security deposit can be non-refundable. This guidance will clarify the rules and expectations regarding non-refundable security deposits for tenants in New Hampshire.

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What Is a Security Deposit in New Hampshire?

A security deposit is typically a sum of money collected by a landlord before a tenant moves into a rental property. The primary purpose is to cover:

• Repairing damages beyond normal wear and tear
• Unpaid rent or fees
• Cleaning costs to restore the unit to its original condition

In New Hampshire, the handling of security deposits is governed by state law, which outlines landlords' obligations regarding the collection, use, and return of these funds.

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Can Landlords Charge Non-Refundable Security Deposits in New Hampshire?

In New Hampshire, landlords may charge a security deposit, but the law specifically requires these deposits to be refundable. According to the state's tenant-landlord laws, a security deposit must be returned to the tenant, less any lawful deductions, at the end of the tenancy.

Key points about security deposits in New Hampshire include:

• Security deposits must be refundable: The deposit must be held in trust by the landlord and returned after the tenant vacates the premises, minus any charges for damages or unpaid rent.
• Non-refundable deposits are not permitted: Landlords cannot label a security deposit as “non-refundable” and retain the funds without providing specific entitlement under the law.
• Advance rent versus deposit: While landlords may require advance rent (for example, first and last month’s rent), this is different from the security deposit and may or may not be refundable depending on the lease terms. However, labeling a security deposit as non-refundable to circumvent refund obligations is not lawful.

In summary, any security deposit collected in New Hampshire must generally be refundable, unless it is properly designated as a fee not classified as a security deposit.

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Common Fees versus Security Deposits

Landlords are allowed to charge certain fees related to the renting process, which may include:

• Application fees
• Pet fees or pet deposits
• Cleaning fees that are clearly disclosed
• Administrative fees

Some of these fees may be non-refundable if disclosed upfront. However, these charges are separate from security deposits. The key distinction is:

• Security deposit: A refundable amount held to cover damage or unpaid rent.
• Non-refundable fees: Charges collected for specific services or conditions, which do not serve as a damage deposit.

Landlords must clearly specify the nature of any fees in the lease agreement and ensure tenants understand what portions of their payments are refundable.

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Legal Requirements for Handling Security Deposits in New Hampshire

New Hampshire law regulates security deposits to protect tenants and ensure transparency. The statutes require landlords to:

• Provide a written receipt for the deposit at the time it is paid.
• Hold the deposit in a trust or escrow account, separate from their personal funds.
• Provide an itemized list of damages and deductions within 30 days after the tenant vacates, if any portion of the security deposit is withheld.
• Return the remaining balance of the deposit within 30 days after the tenant has moved out.

If a landlord fails to comply, tenants may be entitled to recover their deposit and potentially seek additional damages through legal action.

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Tips for Tenants Regarding Security Deposits in New Hampshire

To protect your rights, consider the following recommendations when renting in New Hampshire:

• Read your lease carefully: Ensure the lease clearly distinguishes between refundable security deposit amounts and any non-refundable fees.
• Clarify deposit terms upfront: Ask the landlord to confirm whether any portion of your payments is non-refundable and have it written into the lease agreement.
• Document the property’s condition: Before moving in, take photos or videos of the rental unit to prevent disputes over damages later.
• Request receipts: Always get a written receipt for your deposit and keep it safe.
• Notify the landlord of your forwarding address: This facilitates the timely return of your deposit after move-out.
• Understand your state rights: Familiarize yourself with New Hampshire's landlord-tenant laws, especially the statutes governing security deposits.

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Summary

In New Hampshire, landlords cannot charge non-refundable security deposits. Any security deposit collected must be refundable, with permissible deductions only for damages, unpaid rent, or other legitimate charges as defined by law. Non-refundable fees are differentiated from security deposits but must also be clearly disclosed. Tenants should review lease agreements carefully to understand their financial obligations fully and protect their rights under New Hampshire law.

By understanding these provisions, tenants can confidently navigate security deposit issues and ensure fair treatment in their rental agreements.