{"id":87052,"date":"2026-06-08T00:01:00","date_gmt":"2026-06-08T06:01:00","guid":{"rendered":"https:\/\/www.opinionpublica.tv\/portada\/?p=87052"},"modified":"2026-06-07T18:03:56","modified_gmt":"2026-06-08T00:03:56","slug":"more-renters-are-using-tools-to-skip-security-deposits-but-theres-a-catch","status":"publish","type":"post","link":"https:\/\/www.opinionpublica.tv\/portada\/more-renters-are-using-tools-to-skip-security-deposits-but-theres-a-catch\/","title":{"rendered":"More renters are using tools to skip security deposits, but there\u2019s a catch"},"content":{"rendered":"\n
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As renters struggle to cobble together cash for the upfront costs needed to sign a lease, financial technology firms are promoting alternative tools to manage a common pain point: security deposits.<\/p>\n\n\n\n

These firms team up with landlords and management companies to allow tenants to pay smaller monthly or annual fees that replace the traditional lump sum that can be a stretch for many renters. It often works like a type of insurance.<\/p>\n\n\n\n

These options are useful in the short term because they help keep cash in your pocket, but they do not replace the function of a security deposit. If your landlord files a damage claim during your lease, none of the fees paid to the alternative services apply toward those costs. In this way, the services may offer fewer tenant protections and can even end up costing renters more, new research from the National Consumer Law Center found.<\/p>\n\n\n\n

Still, millions of renters use the services. \u201cThey\u2019re quite widespread,\u201d said April Kuehnhoff, a senior lawyer at the center and an author of the report. She added that the tools tended to be more common among large property managers than \u201cmom and pop\u201d landlords.<\/p>\n\n\n\n

Here\u2019s what to know about these security deposit alternatives.<\/p>\n\n\n\n

What rental costs are usually required upfront?<\/p>\n\n\n\n

In addition to requiring an application fee, landlords may demand an amount equal to the unit\u2019s rent for the first and last months, plus a security deposit of typically about $800, according to a 2025 survey of recent renters by the real estate site Zillow.<\/p>\n\n\n\n

Landlords hold the deposit to cover any missed payments or damage beyond normal \u201cwear and tear\u201d \u2014 like claims of pet damage or broken appliances \u2014 when the tenant moves out. If the landlord makes no claim during the lease, the amount is refunded, sometimes with interest.<\/p>\n\n\n\n

Median upfront costs, including a security deposit, total about $3,700, said Alexander Hermann, senior research associate at the Joint Center for Housing Studies at Harvard, but they can be far higher in some areas. In New York City, for example, before the rules were changed recently to curb broker fees for tenants, upfront costs averaged about $13,000.<\/p>\n\n\n\n

The Joint Center calculated that renter households typically had just $1,810 in cash savings, making it difficult to meet move-in requirements.<\/p>\n\n\n\n

How do deposit alternatives work?<\/p>\n\n\n\n

Generally, instead of forking over a lump sum to a landlord, tenants using these new options pay a fee or premium \u2014 typically monthly or annually \u2014 to the alternative deposit firm, which ultimately protects the landlord. (Often, the service provider is chosen by the landlord.)<\/p>\n\n\n\n

Marketing language on some of the firms\u2019 websites may not make clear that their fees generally aren\u2019t refundable and can\u2019t be applied toward any landlord claim, the consumer law center report said. The provider Rhino\u2019s website, for instance, says it \u201ccovers your rental just like a cash deposit would without the upfront cost.\u201d<\/p>\n\n\n\n

\u201cNone of that money goes back to the tenant,\u201d Ms. Kuehnhoff said.<\/p>\n\n\n\n

Representatives for Rhino could not be reached for comment.<\/p>\n\n\n\n

How much do these alternatives cost?<\/p>\n\n\n\n

Fees may vary by property and by the tenant\u2019s financial situation, so it can be hard for renters to know the exact amount until after an application is submitted. The report said tenants had cited fees ranging from $22 to $65 a month for the duration of the lease.<\/p>\n\n\n\n

Rhino\u2019s website says its security deposit product can be as low as $4 a month, but actual pricing depends on the amount of the required security deposit, a basic credit check and other factors.<\/p>\n\n\n\n

Another provider, Homebody, an offering from the Entrata property management platform, says on its website that instead of paying \u201c$1,000 upfront for a security deposit, you pay about $130 over the course of your lease.\u201d But it also notes that amounts vary.<\/p>\n\n\n\n

The fees can add up over time, Ms. Kuehnhoff said, because they are typically charged each time the lease is renewed. For instance, if you used an alternative service with an annual fee of $130 at a property that required an $800 security deposit, and you stayed at a property for 10 years, you would have paid $1,300 that you would never get back, assuming the fee didn\u2019t increase.<\/p>\n\n\n\n

What happens if my landlord makes a claim?<\/p>\n\n\n\n

Laws for handling deductions from security deposits vary, but tenants generally have the right to challenge landlords in court if they can\u2019t resolve disputes directly. Some states mandate options to avoid court \u2014 Massachusetts lets tenants file a \u201cdemand\u201d letter with landlords \u2014 or allow tenants to file complaints in small claims courts without hiring a lawyer, Ms. Kuehnhoff said.<\/p>\n\n\n\n

But tenants using the alternative coverage will still end up owing money if their landlord submits a request to cover damage.<\/p>\n\n\n\n

Obligo, for example, says that if a charge is submitted for damage or missed rent, the platform \u201cimmediately\u201d initiates payment to the property manager, up to the authorized amount.<\/p>\n\n\n\n

Then, Obligo\u2019s automated system charges the renter for that amount, using a preauthorized bank account or credit card. Obligo declined to make executives available for an interview, but said in an email that tenants received \u201cmultiple\u201d notifications and were not charged until 14 days after charges were submitted. Also, Obligo offers interest-free installment plans to pay costs owed to the landlord.<\/p>\n\n\n\n

\u201cTraditional security deposits are bad for renters,\u201d partly because they lock up cash when a renter needs it most, Obligo said in its email. Its \u201cno deposit\u201d alternative complies with state laws, the company said; rules vary, but provisions for different jurisdictions are built into its system.<\/p>\n\n\n\n

Ms. Kuehnhoff said it appeared that no documentation was required for a landlord\u2019s claim to be paid out. \u201cThere\u2019s really no dispute process.\u201d<\/p>\n\n\n\n

Obligo\u2019s website says the company may review charges or pause payouts \u201cin cases of suspected fraud or renter abuse.\u201d The company said that it \u201cdoes not decide disputes between renters and property managers,\u201d but that renters can flag a charge they disagree with and Obligo will \u201chelp facilitate the conversation\u201d with property managers. The company encourages landlords to provide documentation of charges to avoid disputes, it said, and requires it if local laws do.<\/p>\n\n\n\n

Do states regulate how security deposits are handled?<\/p>\n\n\n\n

State laws address the handling of traditional security deposits. They may set maximum amounts, deadlines for returning funds or rules for how the money is held.<\/p>\n\n\n\n

But alternative products, the report said, may skirt such protections. \u201cEssentially, they are designed to provide landlords the benefits of the security deposit\u201d while avoiding the costs of complying with tenant protection laws, Ms. Kuehnhoff said.<\/p>\n\n\n\n

Kevin Donnelly, executive director and chief advocacy officer of the Real Estate Technology & Transformation Center, an industry group, said financial technology platforms had emerged to help address affordability challenges.<\/p>\n\n\n\n

\u201cWe strongly believe they are a pro-consumer solution to help address housing access,\u201d he said. He added that terms of the deposit alternatives should always be transparent.<\/p>\n\n\n\n

What if I need help with a security deposit?<\/p>\n\n\n\n

Mr. Hermann at the Joint Center said tenants could ask about paying a traditional deposit in installments, though laws vary by city or state. Fannie Mae advises tenants to ask if there\u2019s flexibility on the amount; applicants with strong credit scores may qualify for a smaller deposit.<\/p>\n\n\n\n

Renters can also look into local community grants, Ms. Kuehnhoff said. Some credit unions may offer small \u201cmove in\u201d loans to help with such costs, she said.<\/p>\n\n\n\n