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6-15 Collection of the Security Deposit

HUD Handbook 4350.3 REV-1 — Occupancy Requirements of Subsidized Multifamily Housing Programs · 2026 edition · updated 2026-10-05 · United States

  • A. It is recommended the owner collect a security deposit at the time of the initial lease execution.

  • B. Security deposits provide owners with some financial protection when a tenant moves out of the unit and fails to fulfill his/her obligations under the lease. Additionally, many programs require that owners place security deposits in interest-bearing accounts and allocate the interest to the tenant. This requirement varies by programs and depends to a certain extent on state and local laws.

  • C. The owner must collect a security deposit at the time of the initial lease execution for the following properties:

HUD Occupancy Handbook Chapter 6: Lease Requirements and Leasing Activities

6/07

6-31

Section 2: Security Deposits

4350.3 REV-1

  1. Section 8 New Construction with an AHAP executed on or after November 5, 1979;

  2. Section 8 Substantial Rehabilitation with an AHAP executed on or after February 20, 1980;

  3. Section 8 State Agency with an AHAP executed on or after February 29, 1980;

  4. Section 202/8;

  5. Section 202 PAC;

  6. Section 202 PRAC; and

  7. Section 811 PRAC.

  • D. The amount of the security deposit established at move-in does not change when a tenant’s rent changes.

  • E. The amount of the security deposit to be collected is dependent upon:

    1. The type of housing program;

    2. The date the AHAP or HAP contract for the unit was signed; and

    3. The amount of the total tenant payment or tenant rent.

      • Figure 6-7 outlines the amount of the security deposit the owner may collect for each of the different programs.

  • F. The owner must comply with any applicable state and local laws governing the security deposit.

  • G. The tenant is expected to pay the security deposit from his/her own resources, and/or other public or private sources.

  • H. The owner may collect the security deposit on an installment basis.

  • I. The security deposit is refundable. (See paragraph 6-18 for more information on refunding a security deposit.)

  • J. An applicant may be rejected if he/she does not have sufficient funds to pay the deposit.

HUD Occupancy Handbook Chapter 6: Lease Requirements and Leasing Activities

8/13

6-32

Section 2: Security Deposits

4350.3 REV-1

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▸Contents — HUD Handbook 4350.3 REV-1 — Occupancy Requirements of Subsidized Multifamily Housing Programs
HUD Handbook 4350.3 REV-1 — Occupancy Requirements of Subsidized Multifamily Housing Programs

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