Security deposit


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Security deposit (initial)

Synonymous with the term margin. A cash amount that must be deposited with the broker for each contract as a guarantee of fulfillment of the futures contract. It is not considered as part payment or purchase. Related: Margin.

Security deposit (maintenance)

Related: Maintenance margin

Security Deposit

1. See: Maintenance Margin.

2. An amount that a lessor, lender, seller or provider of a service requires up front to compensate for the risk that he will not receive payment or the agreement will be violated. For example, a landlord may require one month's rent as a security deposit just in case a tenant knocks a hole in the wall and leaves the landlord to pay for it. Generally speaking, if the agreement is followed, the one who pays the security deposit receives the money back. See also: Earnest Money.

security deposit

Money required to be paid to a landlord or to service providers in order to protect them against possible default.The law varies from state to state regarding the following questions: Must the deposit be kept in a separate account from the operating account? Must it earn interest? May it be used to pay for damage to the property,or just default in the payment of rent? How much money can a landlord require? How soon does it have to be refunded? Most states maintain excellent Web sites with information about consumer protection laws, including landlord-tenant law and the requirements related to security deposits.

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