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When you are considering renting an apartment or house, almost all landlords will require that you pay a refundable security deposit.The need for landlords to charge a security deposits reflects (moral hazard/ adverse selection of buyers/ adverse selection of buyers) In particular, since tenants do not own the property in which they live, (they may not feel obligated to maintain the property as well as someone who incurs the full cost of ownership/ on average they will be irresponsible types who are likely to damage the property)

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