In what circumstance can a property manager withhold a security deposit according to tenancy law?

A property manager can withhold a security deposit in the circumstance of damage caused by the tenant. This aligns with tenancy laws, which typically stipulate that the purpose of a security deposit is to cover financial losses incurred by the landlord due to damage that exceeds normal wear and tear during the tenant's occupancy. If a tenant causes significant damage to the property, the landlord has the right to retain some or all of the security deposit to cover the costs of repairs.

In this scenario, the manager must provide the tenant with an itemized list of damages and any deductions made from the deposit. This process ensures transparency and protects both the landlord's investment and the tenant’s rights. The withholding of the deposit in case of damage serves to encourage tenants to maintain the property properly during their lease period and helps landlords recover the costs associated with restoring their property to its original condition after a tenancy ends.