The Delaware Code Title 25 Chapter 55 Section 5515 addresses the following use of surety bonds for residential rental property by landlords and tenants:
Surety Bond
(a) Instead of paying all or part of a security deposit to a landlord under § 5514 of this title, a tenant may purchase a surety bond, the purpose of which shall be:
(1) To reimburse the landlord for actual damages caused to the premises by the tenant which exceed normal wear and tear, or which cannot be corrected by painting and ordinary cleaning; and/or
(2) To pay the landlord for all rental arrearage due under the rental agreement, including late charges and rental due for premature termination or abandonment of the rental agreement by the tenant; and/or
(3) To reimburse the landlord for all reasonable expenses incurred in renovating and rerenting the premises caused by the premature termination of the rental agreement by the tenants, which includes termination pursuant to § 5314 of this title, providing that reimbursement caused by termination pursuant to § 5314 of this title shall not exceed 1 month’s rent.
(b) A landlord may not require a tenant to purchase a surety bond instead of paying a security deposit and a landlord is not required to accept the tenant’s purchase of a surety bond instead of paying a security deposit.
(c) A surety shall refund to a tenant any premium or other charge paid by the tenant in connection with a surety bond if, after the tenant purchases a surety bond, the landlord refuses to accept the surety bond or the tenant does not enter into a lease with the landlord.
(d) The amount of a surety bond purchased instead of a security deposit may not exceed 1 month’s rent per dwelling unit (except as otherwise permitted under § 5514(a)(3) of this title). If a tenant purchases a surety bond and provides a security deposit in accordance with this section, the aggregate amount of both the surety bond and security deposit may not exceed 1 month’s rent per dwelling unit (except as otherwise permitted under § 5514(a)(3) of this title).
(e) Before a tenant purchases a surety bond instead of paying all or part of a security deposit, a surety shall disclose in writing to the tenant that:
(1) Except under the circumstances outlined in subsection (c) of this section, payment for a surety bond is nonrefundable;
(2) The surety bond is not insurance for the tenant;
(3) The surety bond is being purchased to protect the landlord against loss due to nonpayment of rent, breach of lease, or damages caused by the tenant;
(4) The tenant may be required to reimburse the surety for amounts the surety paid to the landlord for any claim made by the landlord against the surety bond;
(5) Even after a tenant purchases a surety bond, the tenant remains responsible for the following:
a. To reimburse the landlord for actual damages caused to the premises by the tenant which exceed normal wear and tear, or which cannot be corrected by painting and ordinary cleaning;
b. To pay the landlord for all rental arrearage due under the rental agreement, including late charges and rental due for premature termination or abandonment of the rental agreement by the tenant; and
c. To reimburse the landlord for all reasonable expenses incurred in renovating and rerenting the premises caused by the premature termination of the rental agreement by the tenants, which includes termination pursuant to § 5314 of this title, providing that reimbursement caused by termination pursuant to § 5314 of this title shall not exceed 1 month’s rent.
(6) Nothing in this section shall be construed to require the tenant to pay, as between the landlord and the surety, more than the total amount owed to the landlord under subsection (a) of this section.
(f) Notwithstanding the issuance of a surety bond by the tenant to the landlord, the tenant has the right to pay the amount due under subsection (a) of this section directly to the landlord or to require the landlord to use the tenant’s security deposit, if any, before the landlord makes a claim against the surety bond.
(g) If the surety fails to comply with the requirements of this section, the surety forfeits the right to make any claim against the tenant under the surety bond.
(h) Within 20 days after the termination or expiration of any rental agreement, the landlord shall provide the tenant with an itemized list of damages to the premises and the estimated costs of repair for each. Failure to do so shall constitute an acknowledgment by the landlord that no payment for damages is due. Tenant’s failure to object to the itemized list of damages within 10 days of the tenant’s receipt of the list shall constitute the tenant’s agreement on the damages specified by the landlord.
(i) The surety or landlord shall deliver to a tenant a copy of the rental agreement and bond form signed by the tenant at the time of the tenant’s purchase of the surety bond.
(j) If a landlord’s interest in the leased premises is sold or transferred, the new landlord shall accept the tenant’s surety bond and may not require:
(1) During the current lease term, an additional security deposit from the tenant; or
(2) At any lease renewal, a surety bond or a security deposit from the tenant that, in addition to any existing surety bond or security deposit, is in an aggregate amount in excess of 1 months’ rent per dwelling unit.
(k) A surety bond issued under this section may only be issued by an admitted carrier licensed by the Delaware Department of Insurance.
Del. Code § 5515.
See also Delaware Landlord Security Deposit Laws.
Return to Delaware Landlord-Tenant Laws.