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New bill removes security deposit limit

A new bill introduced in the Alabama Legislature could see the amount landlords charge in security deposits rise.

Sponsored by Alabama Sen. Keith Kelley, R-Anniston, Senate Bill 242 would remove price restrictions for Alabama landlords in setting their security deposits. Under the Alabama Residential Landlord and Tenant Act, security deposits set by landlords may not exceed the cost of one month’s rent at the same property. 

Kelley’s bill, which is less than three pages long, removes that restriction.

When asked what the intent behind the bill was, Kelley said that by removing the cap on security deposits, prospective tenants with lower credit scores who “are having a hard time securing apartments” would be given more “opportunity” in housing, as landlords would be more likely to rent a property to those with low credit scores if they could charge a higher security deposit.

“One of the things that has happened is you have a lot of young people that, in their early 20s, have maybe not watched their credit and so they’ve got credit trouble,” Kelley told Alabama Daily News.

“They need a place to live, and so what this hopefully will do is make landlords maybe give those with lower credit scores an opportunity. If (landlords) got a little bit more security deposit, they may take a chance and (those with lower credit scores may) wind up with a place to live. A lot of them, especially in a tight rental market, are having a hard time securing apartments.”

Jack Eyer, chairman for the Alabama Real Estate Investors Association, told Alabama Daily News that he, having been a landlord for more than 45 years, was in support of the bill, though it would be “more appropriate” were the cap on security deposits doubled, rather than eliminated entirely.

“If you’re trying to cover the high-risk folks having housing — because we all know they need access to housing — the only way to offset (the risks) is to provide the additional deposits.” Eyer said. “If (tenants) don’t pay, and then they have to be removed, that sometimes can take 60-90 days. I’ve got one right now that’s (not paid rent in) over a year, so it can happen.”

Jennifer Galbreath, the executive director for the Greater Birmingham Apartment Association, said in regards to the proposed modification to the Landlord Tenant Act that her organization – which represents more than 55,000 apartment units – generally “supports the language” of the original Landlord and Tenant Act, and that they were not consulted in the drafting of Kelley’s bill.

“The Association was heavily involved in drafting and passing the original Landlord Tenant Act and, in large part, supports the language that was arrived at in that act through discussion, consultation, and negotiation amongst all involved stakeholders,” Galbreath wrote in an email to Alabama Daily News.

“No request has been made of the association at this time to support the present bill regarding security deposits. The position of the association is that if legislation is proposed to amend the act, it should only be done in a coordinated and considered manner.”

While Kelley and some in the property management sector support the change, others have spoken out against the prospect of allowing landlords to raise security deposits without limits. Dev Wakely, a policy advocate at Alabama Arise, a nonprofit organization that advocates for low-income Alabamians, called the bill “a terrible idea,” and warned that it could have devastating effects for low-income Alabamians.

“Removing the deposit cap of the Landlord Tenant Act is going to hurt people who can afford it the least, and there’s nothing else it could do, frankly,” Wakely told Alabama Daily News.

“Instead of removing the few protections that renters have and letting loose landlords to treat people basically however they decide with zero oversight, what we should do is increase the supply of housing for people who are in need of it.”

Wakely suggested if lawmakers were concerned about housing security for low-income Alabamians, they should increase funding to the state’s Housing Trust Fund, a state program that supports construction, renovation and maintenance of affordable housing for low-income earners.

“I guarantee that there is zero chance whatsoever that anyone claiming this bill is beneficial for low-income tenants actually talked to a single low-income tenant before stating that; that did not happen,” Wakely said. “This is a bad idea, every single person who has ever even talked to someone in a low-income rental situation would oppose that bill.”

The bill is scheduled to be reviewed first in the Fiscal Responsibility and Economic Development Committee at an as-of-yet undermined date.

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