What is the penalty for failure to deposit and maintain a security deposit?

What is the penalty for failure to deposit and maintain a security deposit?

• A. An amount up to 2% of the increase not timely filed or $1000, whichever is less, for each 30 days or portion thereof.
• B. An amount up to 5% of the increase not timely filed or $2500, whichever is less, for each 30 days or portion thereof.
• C. An amount up to 15% of the increase not timely filed or $7500, whichever is less, for each 30 days or portion thereof.
• D. An amount up to 10% of the increase not timely filed or $5000, whichever is less, for each 30 days or portion thereof.

Answer: (D)

The key idea is that penalties for not depositing and keeping up a security deposit are assessed per 30-day period (or part of a period) and are capped at the lesser of two amounts: 10% of the increase that should have been filed or $5,000. This means the longer the delay, the more penalties can accrue, but each 30-day block cannot exceed $5,000 and cannot exceed 10% of the required increase. For example, if the required increase is $60,000, 10% equals $6,000, but the per-period penalty would be capped at $5,000. If the increase is $25,000, 10% is $2,500, which would be the per-period penalty (less than the $5,000 cap). These penalties apply for every 30-day period or portion thereof until the deposit is timely filed and maintained.

The key idea is that penalties for not depositing and keeping up a security deposit are assessed per 30-day period (or part of a period) and are capped at the lesser of two amounts: 10% of the increase that should have been filed or $5,000. This means the longer the delay, the more penalties can accrue, but each 30-day block cannot exceed $5,000 and cannot exceed 10% of the required increase. For example, if the required increase is $60,000, 10% equals $6,000, but the per-period penalty would be capped at $5,000. If the increase is $25,000, 10% is $2,500, which would be the per-period penalty (less than the $5,000 cap). These penalties apply for every 30-day period or portion thereof until the deposit is timely filed and maintained.