AN ACT TO AMEND TITLE 25 OF THE DELAWARE CODE RELATING TO TENANT OBLIGATIONS AND LANDLORD REMEDIES.

This Act allows a landlord to offer the tenant an option to pay a recurring fee in lieu of a security deposit. This option enables tenants who cannot afford a security deposit to find a rental. This Act requires landlords choosing to provide the option to one tenant in a multiunit property to provide the option to all new tenants in that property. This Act also establishes requirements for the landlord offering a tenant the option to pay a fee in lieu of a security deposit including the requirement to notify the tenant of their option to terminate the agreement to pay the recurring fee at any time and to pay a security deposit instead. This Act makes it clear that electing to pay the recurring fee does not eliminate, release, or limit the tenant’s liability for damages under the lease. The recurring fee must be of equivalent amount and payable at the time each rent payment is due. This Act also clarifies the rights and responsibilities of a third-party who compensates a landlord for damages or unpaid indebtedness pursuant to the lease. House Substitute No. 1 for House Bill No. 349 differs from House Bill No. 349 by providing more detailed notification requirements for a landlord offering a fee in lieu of a security deposit and requiring landlords to use fees collected in lieu of a security deposit be utilized by the landlord to purchase coverage for landlord's losses associated with any unpaid amounts due from the tenant to the landlord pursuant to the lease, including rent, fees, or unit damage in excess of wear resulting from normal wear and tear, provided that a landlord may not charge a fee that is more than the cost of obtaining and administering such insurance.