The Landlord/Tenant laws change from being Landlord friendly to Tenant friendly and back again. Currently, they seem to be in favor of the Landlord. I didn't have to pay the increase in Security Deposit because I learned it wasn't legal for the owner to demand we increase our deposit. Other tenants did pay it though because they didn't think to complain, ask, or research.
Landlords can't always be trusted with your security deposit, and there isn't a heck of a lot you can actually do. There are so many horror stories where damage is falsified to justify keeping the tenants security deposit. I have got deposits back (or in the case of my last move, transferred to the new place), so it CAN happen.
I've never got interest on a security deposit however.
I had researched the whole landlord/tenant thing several years ago when my boyfriend was renting out his house. In New Jersey, the security deposit is required by law to be in a separate account. I don't recall whether the interest was required to be paid back to the tenant when they moved.
Michael didn't have a lot of luck with one tenant. His first mistake was to let the guy move in before paying the security deposit. (A sob story will get him every time). Needless tosay, the tenant did not ever pay the deposit. Nor did he pay rent. Michael had to file a suit against him to get rent. I believe he did eventually get some of the back rent. He was finally able to get the guy out of the house. This guy owned a construction company, but turned out to be all kinds of issues there too. Michael now has a good tenant, but I'd never ... ever ... want to deal with being a landlord!
Well ... I can't really say that. Because when we bought our second house, we couldn't sell the first one. We had bought it just before the housing market crashed in 76 or 77. Of course, the housing market is always up and down. Worst thing to do is to buy a house when prices are high. Guaranteed the market will crash within a few months.
So, needless to say, we ended up having to rent the house out for years. First tenant we had in there completely trashed the place. Because the damage had been down over a period of time, insurance paid nothing. Not only did this guy slam holes into the walls, but he took the hood over the range ... one hand on each side ... and twisted the dang thing until it was bent out of shape. We finally got them out of the house when he was arrested for molesting his daughters. Section 8 moved the family elsewhere.
We eventually got someone who wanted to assume the loan, so we got out of the landlord business.
The previous apartment complex I lived in went condo about 2005, which is why I finally moved in 2006 to my current place. When leases expired in 2006, we couldn't renew them ... so we were all in effect ... forced out. I had considered buying my unit when the owner announced he was converting to condos. We were even offered a discount (/rolls eyes). But the cost was still excessive and no way could I afford the payments. Payments would have been double my rent. Since I was paying over $1,000 a month for a 500ish sq ft one bedroom apartment, there was absolutely NO way I was going to pay double. The mortgage people tried to get me to go for an Interest-Only Mortgage, but that made absolutely no sense to me. At some point, payments will inflate ... drastically. His response was you sell before then! Um ... no. I pointed out the housing market is going to crash eventually. His response was ... oh that's not going to happen!
Guess what happened in 2007?
Yep. The worst housing crash in US history.