---
kind: "section"
citation: "7 C.F.R. § 3560.204"
title: "7"
number: "3560.204"
heading: "Security deposits and membership fees."
url: "https://uscodex.org/cfr/7/3560.204"
---

# §3560.204. Security deposits and membership fees.

- (a) **General.** Borrowers may collect security deposits when it is reasonable and customary for the area in which the housing is located. Borrowers must hold security deposits in a separate bank or bookkeeping account in accordance with [§ 3560.302(c)(3)](/cfr/7/3560.302.md?p=c-3).
- (b) **Allowable amounts.** Borrowers may charge security deposits that are typical for the area in which the housing is located, as long as the security deposit charged a tenant does not exceed that tenant's net contribution for one month's rent or basic rent, whichever is greater.
  - (1) As noted in [§ 3560.102(b)(1)(viii)](/cfr/7/3560.102.md?p=b-1-viii) and [§ 3560.156(c)(18)(iii)](/cfr/7/3560.156.md?p=c-18-iii), borrowers must specify in the housing project's management plan how the amount to be charged as a security deposit will be established and must specify the amount to be charged to individual tenants in the lease to be signed by the tenant.
  - (2) Borrowers may charge security deposits to households receiving HUD assistance in accordance with HUD requirements.
  - (3) Members of a cooperative shall be required to pay a membership fee no greater than one month's occupancy charge.
  - (4) Additional security deposits for pets may be charged as long as the additional deposit is not greater than basic rent for 1 month. No additional security deposit for assistance animals is allowed where an assistance animal is necessary for the normal functioning of a household member with a disability.
  - (5) Borrowers must not charge additional security deposits based on disabilities of tenants or other personal characteristics.
- (c) **Payment plans.** Borrowers must offer, for persons who are eligible for rental assistance or [Section 8](/cfr/7/8.md) assistance, the option of paying the security deposit on an installment payment plan. Should installments not be met, the total charge may become due and payable in full.
- (d) **Charges for damage or loss.** Borrowers may charge tenants for damage or loss caused or allowed by the tenant equal to the cost of the damage or loss.
  - (1) Borrowers must consider expenses due for addressing normal wear and tear as normal operating expenses and must not charge tenants a fee or withhold security deposits to pay for such costs.
  - (2) Borrowers may withhold security deposits and may charge tenants for damage or loss costs above security deposit amounts.
- (e) **State and local security deposit requirements.** Borrowers must follow all state and local laws and other requirements governing the handling and disposition of security deposits.
  - (1) Resolution of any security deposit disputes must be handled in accordance with state and local law.
  - (2) Any interest earned on security deposits will accrue in accordance with state law.
- (f) **Unclaimed security deposits.** Any funds in the housing project's security deposit account unclaimed by a tenant must be deposited into the housing project's general operating account.

## Notes

### Authority

Authority: 42 U.S.C. 1480.

### Source

Source: 69 FR 69106, Nov. 26, 2004, unless otherwise noted.