What is a security deposit in the context of leasing property?

A security deposit in the context of leasing property is a payment made by a tenant to the landlord that serves as a precautionary measure against potential damages to the property or unpaid rent during the lease term. The primary purpose of the security deposit is to protect the landlord's interests, ensuring that there are funds available to repair any damages that may occur beyond normal wear and tear or to cover any unpaid rent before the tenant vacates the property.

When a tenant moves out, the landlord typically assesses the condition of the property and determines if any deductions from the security deposit are warranted based on damage or necessary cleaning. If no deductions are needed, the full deposit is returned to the tenant. This practice helps encourage tenants to take care of the property they are renting, knowing that they will be held financially responsible for any significant issues that arise during their occupancy.

In contrast, other options mentioned pertain to different aspects of leasing but do not correctly define a security deposit. For example, rent paid at the end of the lease term is simply the payment for the use of the property and not related to damages or unpaid obligations. A fee for early termination of the lease reflects penalties for breaking the lease agreement prematurely, while an advance payment towards the last month's rent is a