MARINA DEL REY – (BUSINESS WIRE) – LeaseLock, the only provider of a nationwide A-rated lease insurance program, announced a bill laying the groundwork for security deposit elimination in Pennsylvania has been introduced in the state’s General Assembly.
Similar to Cincinnati Renter’s Choice law that recently went into effect, Pennsylvania House Bill 2427 would require apartment operators that charge security deposits to offer residents a deposit installment plan or a deposit alternative. The bill would also give operators the choice to eliminate security deposits entirely through lease insurance.
“Apartment operators and residents have dealt with the many problems caused by deposits. As a result, there is a growing desire to get rid of them, even before the coronavirus pandemic,” said Reichen Kuhl, President, Founder and Chief of Insurance and Legal for LeaseLock.
“COVID-19 really prioritized affordability issues. We see this new Pennsylvania bill as just the beginning of a flood of deposit elimination legislation to come nationwide.”
Many states and local governments have passed laws limiting the size of security deposits and requiring operators to offer deposit installment plans. Now, as the Cincinnati law and similar Virginia renter’s choice legislation and the Pennsylvania legislation show, there is an emerging movement to eliminate deposits altogether.
Under Pennsylvania House Bill 2427, among the deposit alternatives and replacements available to apartment residents and operators are:
Deposit installment plans: The resident can pay the security deposit over the course of a minimum of three months.
Lease insurance: Lease insurance effectively eliminates deposits and insures the property on every new lease (residents may still elect a deposit). Leases are protected with over $5,000 coverage for rent loss and damage.
Surety bonds: Renters pay a non-refundable percentage of the bond value at move-in, which goes into a claims fund. Bonds typically cover up to the deposit amount. With the renter party to the insurance contract, operators must manage additional consumer regulatory requirements.