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5514. Security deposit.
(a) (1) A landlord may require the payment of security deposit.
(2) No landlord may require a security deposit in excess of 1 month’s rent where the rental agreement is for 1 year or more.
(3) No landlord may require a security deposit in excess of 1 month’s rent (with the exception of federally-assisted housing regulations), for primary residential tenancies of undefined terms or month to month where the tenancy has lasted 1 year or more. After the expiration of 1 year, the landlord shall immediately return, as a credit to the tenant, any security deposit amount in excess of 1 month’s rent, including such amount which when combined with the amount of any surety bond is in excess of 1 month’s rent.
(4) The security deposit limits set forth above shall not apply to furnished rental units.
(b) Each security deposit shall be placed by the landlord in an escrow bank account in a federally-insured banking institution with an office that accepts deposits within the State. Such account shall be designated as a security deposits account and shall not be used in the operation of any business by the landlord. The landlord shall disclose to the tenant the location of the security deposit account. The security deposit principal shall be held and administered for the benefit of the tenant, and the tenant’s claim to such money shall be prior to that of any creditor of the landlord, including, but not limited to, a trustee in bankruptcy, even if such money is commingled.
(c) The purpose of the security deposit shall be:
(1) To reimburse the landlord for actual damages caused to the premises by the tenant which exceed normal wear and tear, or which cannot be corrected by painting and ordinary cleaning; and/or