Any time you sign a new lease for an apartment, the landlord is going to want you to put down a security deposit.  This is a good faith down payment that gives you an incentive to stick to the lease while also providing the landlord with some extra cash if you decide to balk on the rent.  Usually the security deposit is the same as one month’s rent, unless the landlord has been burned a bunch of times, then you might see a security deposit worth two month’s rent.  This, I am sure, comes as no big surprise.

However, I am starting to see more and more provisions in leases that state that the tenant will owe a liquidated damage if he/she tries to end the lease early.  A liquidated damage is a monetary amount that the parties to a contract agree on at the signing of the contract.  Liquidated Damages must be a reasonable prediction at the time of the signing and not meant to punish the defaulting party.  So, what is reasonable?

Pennsylvania courts have stated that a liquidated damage is reasonable when equal to the security deposit.  That means, if you end your lease early, the landlord will have the right to a liquidate damage equal to the security deposit.  Is this legal?  Yes.  But, beware of how much the landlord is trying to get.  I suggest you don’t sign a lease containing a liquidated damage clause, but sometimes, you don’t have an option, especially as they become more common.

If the landlord ever tries to collect this damage, you may be able to fight it.