A: A security deposit in a residential lease serves the following key purposes: 1. Property Protection: It covers damage or excessive wear and tear to the rental property during the tenant's stay. 2. Rent Arrears: It can be used to cover unpaid rent or other financial obligations if the tenant fails to pay rent. 3. Tenant Responsibility: It encourages tenants to take care of the property and fulfill lease obligations. 4. Landlord's Peace of Mind: It acts as insurance for landlords against potential losses. 5. Legal Compliance: Landlords must follow specific laws for holding and returning deposits. 6. Tenant Refund: Tenants get the deposit back if they meet lease terms, encouraging compliance. 7. Understanding deposit terms and local regulations is crucial to prevent disputes.