Philadelphia Security Deposit Rules 2026–27: The 2-Month Cap, the New Installment Option, Interest and the 30-Day Return Deadline
Moving into a new apartment in Philadelphia can mean handing over first month's rent plus a security deposit worth one or two more months, all before you get the keys. Councilmember Rue Landau, who sponsored a new city law on deposits, put it this way in a January 2025 council session, as quoted by CBS Philadelphia: "People are being asked for three months' rent up front with the median rent of $1,800."
Pennsylvania law has long limited how big a deposit can be and set a 30-day deadline for getting it back. Since December 2, 2025, Philadelphia has added a new right: at many buildings, you can now pay part of a large deposit in installments instead of all at once.
This guide covers how much a landlord can charge, the new installment rule, where your money must be kept, when you earn interest, and how to get your deposit back.
Last checked October 2026. Sources: Pennsylvania's Landlord and Tenant Act of 1951 as amended (68 P.S. sections 250.511a–250.512), including the text of Act 363 of 1972; Community Legal Services of Philadelphia's guide to security deposits; the certified copy of Philadelphia Bill No. 250044-A; and CBS Philadelphia's report on the new law. This is general information, not legal advice.
The Short Version
Rule | What the law says |
Maximum deposit, first year | Two months' rent |
Maximum deposit, from the second year | One month's rent; the extra must be returned |
After five years | The deposit can't be increased, even if rent goes up |
Installments (Philadelphia) | If the deposit is more than one month's rent, you can pay one month up front and the rest in three monthly payments, at landlords with 3 or more units |
Interest | Starts after the second year on deposits over $100; the landlord may keep 1% a year |
Return deadline | 30 days after the lease ends or you move out and the landlord accepts the keys, whichever is first |
If the landlord misses it | Loses the right to keep any part for damages or sue you for damages; may owe double |
How Much a Landlord Can Charge
Pennsylvania caps security deposits based on how long you've lived there. According to Community Legal Services (CLS):
First year of a lease: no more than two months' rent.
Starting the second year: no more than one month's rent. If the landlord is holding more, it must return the excess.
After five years: the landlord can't increase the deposit, even if the rent goes up.
Philadelphia's new ordinance folds this state limit into the city's code. It is now an "unfair rental practice" under the Philadelphia Code to charge or accept a deposit larger than state law allows.
A deposit is not rent
CLS points out that a security deposit is your money, held by the landlord to cover damage you cause and sometimes unpaid rent. Without the landlord's agreement, you can't use it as your last month's rent. If you want to, get the landlord's agreement in writing before you move out.
New in Philadelphia: Paying the Deposit in Installments
Bill No. 250044-A was passed by City Council on June 12, 2025, and signed by Mayor Cherelle Parker on September 3, 2025. It took effect 90 days later, on December 2, 2025, and applies to residential leases signed or renewed after it became law.
How it works
If the deposit is one month's rent or less, the landlord can still require it as a single lump sum.
If the deposit for the first year is more than one month's rent, the landlord must accept payment your way:
a lump sum; or
one month's rent up front, with the rest split into three equal payments, due no more often than once a month, starting the month after your tenancy begins.
The total deposit must be the same whichever option you choose. A landlord can't charge more for the installment plan.
Example: your rent is $1,500 and the landlord asks for a two-month deposit of $3,000. You can choose to pay $1,500 at move-in and then three payments of $500 in the following months.
Who has to offer it
The installment rule doesn't apply to an owner or manager with two or fewer rental units. To stop large landlords from slipping through, the ordinance counts units across all the legal entities a person owns or controls. Properties held by separate LLCs are treated together if substantially the same people own, operate or manage them.
If a landlord refuses
A violation of the city's deposit rules is an unfair rental practice. In court, a tenant can recover actual damages or, if the tenant chooses before judgment, statutory damages equal to one month's rent. The court may also award reasonable attorney's fees and costs.
Ask for the installment option in writing so you have a record. If the landlord says no and you think the building is covered, talk to a tenant legal service before you sign.
A related law: application fee caps
CBS Philadelphia reported that a companion bill (No. 250045), which took effect the same day, caps rental application fees at the landlord's actual cost of a background or credit check or $50, whichever is less, and bars charging the same applicant more than one background check fee in 12 months.
Where Your Deposit Must Be Kept
State law also controls how a landlord holds deposits over $100. According to CLS:
Deposits over $100 must be placed in an approved bank, and the landlord must tell you in writing which bank holds it and where it is.
A landlord can post a bond instead of using an escrow account. The bond guarantees that you'll get your deposit back with interest.
Keep the written notice with your lease. It tells you where your money is if there's a dispute later.
When You Earn Interest
Interest only applies to deposits over $100, and not right away.
Years one and two: no interest is owed to you.
Starting the third year: the landlord must put the deposit in an interest-bearing account.
From the end of the third year: the landlord must pay you the interest earned each year, minus a fee of 1% a year of the deposit that the landlord may keep for administrative costs.
When the tenancy ends, the deposit is returned with any unpaid interest, less lawful deductions.
Getting Your Deposit Back
What you need to do
Give your forwarding address in writing. CLS says you must give the landlord written notice of your new address when you move out to be able to sue for double the deposit. Send it by a method you can prove, such as certified mail, and keep a copy.
Move out on time and return the keys.
Document the unit's condition. Take dated photos and video when you move in and when you leave.
What the landlord must do
Under section 512 of the Landlord and Tenant Act, within 30 days after the lease ends or after you surrender the unit and the landlord accepts it, whichever comes first, the landlord must:
give you a written list of any damages it claims you caused; and
pay you the difference between the deposit, plus any unpaid interest, and the actual cost of those damages.
Reasonable wear and tear isn't damage, CLS notes. The law also lets a landlord keep the deposit for unpaid rent or other lease violations.
If the landlord misses the deadline
The penalties are strict:
No list within 30 days: the landlord forfeits all rights to withhold any part of the deposit for damages and loses the right to sue you over damage to the unit.
No refund of the balance within 30 days: the landlord can be liable for double the amount by which the deposit, plus interest, exceeds the actual damages.
If it comes to court, the law puts the burden of proving actual damages on the landlord.
If Your Landlord Won't Pay
Send a written demand. Cite the 30-day rule, list what you're owed, and give a short deadline. Keep a copy and proof of delivery.
Gather evidence: your lease, the bank notice, payment records, move-in and move-out photos, your forwarding address letter, and any damage list you got.
Get legal advice. Community Legal Services of Philadelphia offers housing help; its Center City office is at 1424 Chestnut St. and its North Philadelphia Law Center is at 1410 W. Erie Ave.
Consider filing a claim. A lawsuit for your deposit can include double damages under state law and, for violations of the city's deposit rules, the remedies in Bill 250044-A.
A Quick Checklist Before You Sign
Is the deposit more than two months' rent? That's over the state limit.
Is it more than one month's rent? Ask for the installment option if the landlord has three or more units.
Get the deposit amount, and later the bank's name and address, in writing.
Note the date you'll pass two years. That's when interest starts building.
Put a move-out reminder on your calendar: forwarding address in writing, keys returned, photos taken.
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