Security Deposit Laws by State: The Landlord's Guide

Why security deposit rules trip up small landlords

Security deposits are one of the most heavily regulated parts of a tenancy, and the rules differ in almost every state. Three things vary the most: how much you can collect, whether you owe interest while you hold it, and how quickly you must return it after move-out.

Getting any of these wrong is expensive. Many states let a tenant recover two or three times the deposit (plus attorney's fees) if you miss a return deadline or make an improper deduction. The good news: the rules are knowable, and a few habits keep you safe.

How much can you collect?

Most states cap the deposit at one to two months' rent, though a growing number have removed the cap entirely. Always check your specific state, and remember that 'last month's rent' collected up front is often treated as a deposit under the law.

Do you owe interest on the deposit?

About a dozen states — plus cities like Chicago and Berkeley — require you to pay the tenant interest on their deposit. The rate ranges from a fixed statutory figure (Massachusetts uses 5%) to a rate the state publishes each year, and some states only require interest after the deposit has been held for a minimum period.

Use our security deposit interest calculator to compute the exact figure for your state, with the statute cited, and download a statement to give your tenant.

Returning the deposit on time

Return deadlines typically run 14 to 60 days after move-out, and most states require an itemized list of any deductions. Send the return and itemization by a method you can prove, and keep copies of move-in and move-out condition reports.