What is a Deposit Protection Service?

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  • Written By: N. Madison
  • Edited By: Jenn Walker
  • Last Modified Date: 15 October 2019
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A deposit protection service is a company that provides a service to landlords and tenants. This type of service often holds and manages security deposits for landlords and their tenants. In some cases, this type of service also provides deposit insurance for a landlord who would rather keep a deposit instead of depositing it with a service. Often, a deposit protection service also provides a dispute resolution process for cases in which a tenant and a landlord do not agree on the return of a security deposit.

The laws in many jurisdictions require landlords to return security deposits to their tenants within a specific period of time after a tenancy lease ends or a tenant vacates a rental property. Similar laws stipulate when and how a landlord can deduct money from a security deposit. Such laws often give deadlines for the return of security deposits and provide methods for handling security deposit disputes in a courtroom. Despite such laws, however, landlords do not always return security deposits on time or in keeping with local laws. Deposit protection services typically work to ensure that a tenant’s deposit is kept safe and returned in a timely manner.


The manner in which a deposit protection service works may vary from service to service. Many, however, maintain accounts in which a tenant’s security deposit is held. This allows the landlord the security of knowing the deposit is available in the event the tenant damages a rental property. It also provides the tenant with the security of knowing his deposit is kept safe rather than being spent by the landlord. These services typically facilitate the prompt return of a security deposit to a tenant once a lease has ended, the tenant has vacated the rental property, and any other conditions have been met.

Some deposit protection services provide alternatives for landlords who do not want to place security deposits on account with this type of service. For example, some offer security deposit insurance instead. In such a case, a landlord pays insurance premiums to the deposit protection service and keeps the security deposit. In the event the landlord fails to return the deposit, the tenant can file a claim to obtain his money.

Regardless of whether a landlord opts to place a security deposit in a deposit protection service account or simply purchases insurance for it, tenants and landlords do have recourse for disputes. Most deposit protection services provide dispute resolution processes to help tenants and landlords who do not agree about a security deposit's use or release. Likewise, these services may ban landlords who do not obey the rules.


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