You aren't alone if you haven't heard of Security Deposit Bond. A Security Deposit Bond is a fancy way to say Security Deposit Insurance. These products have been used for years and are becoming a common alternative to replace the need for a Cash Security Deposit and makes the move-in process Deposit Free.
Instead of a Landlord asking for a cash Security Deposit, Landlords may provide Bond options to potential tenants. These Bonds provide Landlords a guarantee for damages and adherence to the lease terms while providing Tenants less out-of-pocket expenses associated with finding a new place to call home.
For example, suppose a tenant wishes to lease a property with a rent rate of $2200, and the Security Deposit requirement is $2000. In that case, the Tenant must come up with the Security Deposit plus the 1st month's rent, a total of $4,200, before moving in. With an approved Security Deposit Bond, the total cash required would be just the first month's rent of $2200. Using the Deposit Bond option, the Tenant enjoys the flexibility to retain their funds for other moving expenses and as a cushion for future expenses.
As with any insurance product like auto or home insurance, there is a small cost for the Security Deposit Insurance (aka Bond) which is non-refundable. The price for these bonds varies depending on the bond amount and other factors. While bond prices are typically $150-450 per year (monthly options also available), bonds for well-qualified applicants can be purchased for as little as $120 per year or $10 per month.
A security deposit bond is a great way for landlords to protect themselves from unpaid rent and damage done to a rental property while helping Tenants lower move-in costs. Tenants will still be liable for their typical tenant responsibilities found in their lease, but Tenants will have the peace of mind of knowing that their money is not tied up and not accessible during the term of the lease. It's also important to understand that Tenants are not released from liability and will have to pay any charges for damages or obligations under their lease.