New Pennsylvania Legislation Would Help Pave the Way for Security Deposit Elimination
Bill requires apartment operators to offer replacements to the traditional upfront deposit
MARINA DEL REY, Calif., April 22, 2020 /PRNewswire/ -- LeaseLock, the only provider of a nationwide A-rated lease insurance program that totally eliminates security deposits, surety bonds and guarantors in rental housing, today announced that a bill laying the groundwork for the elimination of security deposits in Pennsylvania has been introduced in the state's General Assembly.
Similar to a 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 in the form of a surety bond. The bill would also give apartment operators the choice to eliminate security deposits entirely through lease insurance.
"Both apartment operators and residents have long been familiar with the many problems that large, upfront security deposits create. As a result, there was a growing desire across the multifamily industry to get rid of them even before the coronavirus pandemic," said Reichen Kuhl, President, Founder and Chief of Insurance and Legal for LeaseLock. "Now, with concerns about renter affordability mushrooming because of COVID-19, this new Pennsylvania bill is likely just the beginning of a flood of deposit elimination legislation across the country—legislation that is far more effective at solving the security deposit problem than other burdensome laws that have sprung up which merely tighten restrictions around, and complicate the already-problematic use of, security deposits."
In recent years, 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 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: Operators may offer lease insurance, which effectively eliminates security deposits entirely and insures the property on every new lease (although residents may still elect for a deposit). Unlike a deposit or surety bond, the typical lease is protected with over $5,000 coverage for rent loss and damage. Because the property is the insured party (not the resident), regulatory burdens are eliminated for operators at the site level.
- Surety bonds: Residents may bring their own deposit alternative, the primary example being a bond in which the renter is party to the insurance contract. With a surety bond, the renter pays a non-refundable percentage of the bond amount at move-in, which goes into a claims fund (where losses are managed at the property or carrier level). Bonds typically cover up to the amount of the deposit. With the renter party to the insurance contract, operators must manage additional consumer regulatory requirements related to insurance.
For more information on Pennsylvania House Bill 2427, visit LeaseLock's website.
LeaseLock powers a modern lease experience with insurance technology. Instead of paying an upfront security deposit or surety bond, or having to secure a guarantor, renters pay a small monthly deposit waiver fee that generates over $5,000 in coverage for the property on every lease. Renters save thousands of dollars at move-in, while apartment communities drive more traffic, convert more leases, significantly reduce bad debt and fully eliminate deposit administration and liability.
LeaseLock Zero Deposit™ is fully automated within the native leasing workflow—from move-in to move-out. Unlike surety bonds and rent guarantees that require leasing agents to direct residents to third-party websites and apps, LeaseLock instantly covers all new leases with over $5,000 lease insurance coverage without any separate registration, application or billing process.
LeaseLock is integrated with all major property management software systems, including Yardi, RealPage and Entrata. The resident leasing experience is seamless and completely native—requiring no change in process for on-site teams.
About LeaseLock
LeaseLock helps the world find home. Powered by insurance technology, LeaseLock delivers a modern lease experience for rental housing—faster, simpler and more affordable.
Headquartered in Marina Del Rey, CA, LeaseLock totally eliminates all deposits, bonds and guarantors. Renters pay an affordable monthly fee that generates over $5,000 in coverage for the property on every lease. Renters save thousands of dollars at move-in, while properties increase occupancy, reduce bad debt, and eliminate deposit administration and liability.
LeaseLock has insured over $200 million in leases, and is backed by insurance rated A (Excellent) by A.M. Best. LeaseLock has secured $25 million from leading insurance, technology and real estate venture funds including Liberty Mutual Strategic Ventures, American Family Ventures, Wildcat Venture Partners and Moderne Ventures. For more information, please visit www.leaselock.com.
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SOURCE LeaseLock
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