Illinois Leasing Agent Practice Exam

What is a security deposit defined as?

1. A form of rent

2. An advanced payment for future rent

3. A sum to ensure against damages

4. A fee for late payment

The correct answer is: A sum to ensure against damages

A security deposit is primarily a sum of money collected by a landlord or property manager from a tenant at the beginning of a lease agreement, which serves to ensure protection against potential damages to the property during the tenant's occupancy. This deposit is not intended to cover regular rent payments; instead, it acts as a financial safety net for the landlord in case the tenant fails to fulfill their obligations, such as causing damage to the property beyond normal wear and tear. When a tenant vacates the property, the landlord can retain part or all of the security deposit to cover repair costs or unpaid rent, as outlined by the lease agreement. This practice helps both parties, as it motivates tenants to take care of the property while providing financial recourse for landlords. Thus, identifying a security deposit as a sum to ensure against damages accurately reflects its intended purpose within rental agreements.