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Landlord-Tenant Law

Do Landlords Pay Interest on Security Deposits? A State-By-State Guide

At the beginning of a tenancy, a landlord will generally collect a security deposit to cover the cost of any damage that is done to the property or outstanding rent. Upon termination or completion of the lease, if no damage has been done and the rent has been paid in full, the deposit will be returned to the tenant.

How Much Can I Charge for a Security Deposit?

Depending on where your rental property is located, there is varying legislation regarding how much money can be charged for a security deposit. It is common for there to be a maximum deposit allowed of one or two months’ rent but some states have no specific laws.

Do Landlords Need to Pay Interest on Security Deposits?

Once you have determined how much to charge, you should familiarize yourself with whether or not landlords are expected to pay interest on security deposits in your state. Some states require landlords to keep deposits in an interest-bearing account and others require a minimum interest amount to be paid (for example, 5%). More often than not, the tenant is entitled to any accrued interest on security deposits.

RelatedWhat Can Landlords Deduct From The Security Deposit?

security deposit city scape

Security Deposit Laws By State

Below we break down the key security deposit laws that landlords need to know in each state.

Alabama 

Maximum deposit equivalent to: One month’s rent

Return deadline: 60 days

Interest on security deposits: n/a

Notes: Additional security deposit can be collected for pets

Alaska

Maximum deposit equivalent to: Two months’ rent (unless rent is over $2,000 a month)

Return deadline: 14 days if tenant gave proper notice to terminate tenancy, 30 days if not.

Interest on security deposits: n/a

Notes: Additional security deposit can be collected for pets

Arizona

Maximum deposit equivalent to: One and a half months’ rent

Return deadline: 14 days

Interest on security deposits: n/a

Notes: n/a

Arkansas

Maximum deposit equivalent to: Two months’ rent

Return deadline: n/a

Interest on security deposits: n/a

Notes: Deposit limit applies to landlords with 6 or more properties

California

Maximum deposit equivalent to: Two months’ rent for unfurnished, three months’ for furnished

Return deadline: 21 days

Interest on security deposits: n/a

Notes: n/a

Colorado

Maximum deposit equivalent to: No state law

Return deadline: One month, unless stated otherwise (can’t be over 60 days)

Interest on security deposits: n/a 

Notes: Check with city/council laws for deposit amounts

Connecticut

Maximum deposit equivalent to: Two months’ rent unless the tenant is over 62 years old. If the tenant is over 62 years old, one month’s rent.

Return deadline: 30 days

Interest on security deposits: Deposit to be placed in a Connecticut-based bank. Landlords must pay tenants interest annually or credit it towards rent.

Notes: n/a

Delaware

Maximum deposit equivalent to: One month’s rent for leases of over a year. No limit for month-to-month leases.

Return deadline: n/a

Interest on security deposits: n/a

Notes: Additional security deposit can be collected for pets

Florida

Maximum deposit equivalent to: No state law

Return deadline: 15-60 days, depending on whether or not deductions are made

Interest on security deposits: Landlords must pay tenant incurred interest yearly and at the end of the lease (unless the tenant wrongfully terminates early)

Notes: Check with city/council laws for deposit amounts

Georgia

Maximum deposit equivalent to: No state law

Return deadline: 30 days

Interest on security deposits: n/a

Notes: Check with city/council laws for deposit amounts

Hawaii

Maximum deposit equivalent to: One month’s rent

Return deadline: 14 days

Interest on security deposits: n/a

Notes: Additional security deposit can be collected for pets

Idaho

Maximum deposit equivalent to: No state law

Return deadline: 21 days and up to 30 days if agreed to by landlord and tenant

Interest on security deposits: n/a

Notes: Check with city/council laws for deposit amounts

Illinois

Maximum deposit equivalent to: No state law

Return deadline: 30-45 days depending on whether or not deductions are made

Interest on security deposits: Landlord to pay the tenant interest on the security deposit if held for at least six months and there are at least 25 units in the building. Interest can be paid or credited to rent every 12 months

Notes: Check with city/council laws for deposit amounts

Indiana

Maximum deposit equivalent to: No state law

Return deadline: 45 days

Interest on security deposits: n/a

Notes: Check with city/council laws for deposit amounts

Iowa

Maximum deposit equivalent to: Two months’ rent

Return deadline: 30 days

Interest on security deposits: Landlord must start paying tenant interest on deposit after a tenancy has been in effect for 5 years. If tenancy is under 5 years, the landlord is entitled to any accrued interest.

Notes: n/a

Kansas

Maximum deposit equivalent to: One month’s rent for unfurnished properties, half a month’s rent for furnished

Return deadline: 30 days

Interest on security deposits: Landlord is entitled to any accrued interest on security deposit

Notes: Additional pet deposits of up to half a month’s rent can be collected

Kentucky

Maximum deposit equivalent to: No state law

Return deadline: 30-60 days

Interest on security deposits: n/a

Notes: Check with city/council laws for deposit amounts

Louisiana

Maximum deposit equivalent to: No state law

Return deadline: One month

Interest on security deposits: n/a

Notes: Check with city/council laws for deposit amounts

Maine

Maximum deposit equivalent to: Two months’ rent

Return deadline: 21-30 days

Interest on security deposits: n/a

Notes: n/a

Maryland

Maximum deposit equivalent to: Two months’ rent

Return deadline: 45 days

Interest on security deposits: Landlords must pay interest on deposits of $50 or more when they have been held for at least 6 months

Notes: n/a

Massachusetts

Maximum deposit equivalent to: One month’s rent

Return deadline: 30 days

Interest on security deposits: Deposit must be placed in interest-bearing account (5% or bank rate). Interest is to be paid to the tenant.

Notes: n/a

Michigan

Maximum deposit equivalent to: One and a half month’s rent

Return deadline: 30 days

Interest on security deposits: n/a

Notes: n/a

Minnesota

Maximum deposit equivalent to: No state law

Return deadline: n/a

Interest on security deposits: Deposit must be placed in interest-bearing account (at least 1%). Interest to be paid to tenant

Notes: Check with city/council laws for deposit amounts

Mississippi

Maximum deposit equivalent to: No state law

Return deadline: 45 days

Interest on security deposits: n/a

Notes: Check with city/council laws for deposit amounts

Missouri

Maximum deposit equivalent to: Two months’ rent

Return deadline: 30 days

Interest on security deposits: n/a

Notes: n/a

Montana

Maximum deposit equivalent to: No state law

Return deadline: 10-30 days

Interest on security deposits: n/a

Notes: Check with city/council laws for deposit amounts

Nebraska

Maximum deposit equivalent to: One month’s rent

Return deadline: 14 days

Interest on security deposits: 

Notes: Additional security deposit can be collected for pets

Nevada

Maximum deposit equivalent to: Three months’ rent

Return deadline: 30 days

Interest on security deposits: n/a

Notes: n/a

New Hampshire

Maximum deposit equivalent to: One month’s rent or $100 (whichever is greater)

Return deadline: 30 days

Interest on security deposits: Landlords must pay interest on deposits held for a year or longer

Notes: n/a

New Jersey

Maximum deposit equivalent to: One and a half month’s rent

Return deadline: 30 days or 5 days if the tenant vacates due to fire, flood, etc.

Interest on security deposits: Deposit must be placed in interest-bearing account. Interest to be paid to tenant annually

Notes: n/a

New Mexico

Maximum deposit equivalent to: One month’s rent for leases of under a year. No state limit for leases over a year

Return deadline: 30 days

Interest on security deposits: Landlords must pay interest annually on deposits larger than one month’s rent

Notes: n/a

New York

Maximum deposit equivalent to: No state law

Return deadline: 21-45 days

Interest on security deposits: Landlords must pay interest for deposits in buildings with 6 or more units. The landlord may keep up to 1% of the deposit amount, the rest of accrued interest is to be paid to tenant.

Notes: Check with city/council laws for deposit amounts

North Carolina

Maximum deposit equivalent to: One and a half month’s rent on a month-to-month lease, two months’ rent for fixed leases longer than 2 months

Return deadline: 30 days

Interest on security deposits: n/a

Notes: Additional security deposit can be collected for pets

North Dakota

Maximum deposit equivalent to: One month’s rent

Return deadline: 30 days

Interest on security deposits: Landlords must pay tenant interest (at the end of the lease) if tenancy is longer than 9 months

Notes: Additional security deposit of two months’ rent or $2,500 can be collected for pets

Ohio

Maximum deposit equivalent to: No state law

Return deadline: 30 days

Interest on security deposits: Landlords must pay interest at a rate of 5% per year if the tenancy is longer than 6 months.

Notes: Check with city/council for deposit amounts

Oklahoma

Maximum deposit equivalent to: No state law

Return deadline: 45 days

Interest on security deposits: n/a

Notes: Check with city/council for deposit amounts

Oregon

Maximum deposit equivalent to: No state law

Return deadline: 31 days

Interest on security deposits: n/a

Notes: Check with city/council for deposit amounts

Pennsylvania

Maximum deposit equivalent to: Two months’ rent during the first year or one month’s rent after that

Return deadline: 30 days

Interest on security deposits: Landlords must pay interest on deposits over $100 after 2 years of tenancy

Notes: n/a

Rhode Island

Maximum deposit equivalent to: One month’s rent

Return deadline: 20 days

Interest on security deposits: n/a

Notes: n/a

South Carolina

Maximum deposit equivalent to: No state law

Return deadline: 30 days

Interest on security deposits: n/a

Notes: Check with city/council for deposit amounts

South Dakota

Maximum deposit equivalent to: One month’s rent

Return deadline: 14-45 days

Interest on security deposits: n/a

Notes: Additional security deposit can be collected for pets

Tennessee

Maximum deposit equivalent to: No state law

Return deadline: 30 days

Interest on security deposits: n/a

Notes: Law does not apply to counties with a population of under 75,000. Check with city/council for deposit amounts

Texas

Maximum deposit equivalent to: No state law

Return deadline: 30 days

Interest on security deposits: n/a

Notes: Check with city/council for deposit amounts

Utah

Maximum deposit equivalent to: No state law

Return deadline: 30 days

Interest on security deposits: n/a

Notes: Check with city/council for deposit amounts

Vermont

Maximum deposit equivalent to: No state law

Return deadline: 14 days

Interest on security deposits: n/a

Notes: Check with city/council for deposit amounts

Virginia

Maximum deposit equivalent to: Two months’ rent

Return deadline: 45 days

Interest on security deposits: Landlords must pay interest on deposit if they have it for over 13 months

Notes: n/a

Washington

Maximum deposit equivalent to: No state law

Return deadline: 21 days

Interest on security deposits: n/a

Notes: Check with city/council for deposit amounts

West Virginia

Maximum deposit equivalent to: No state law

Return deadline: 45-60 days

Interest on security deposits: n/a

Notes: Check with city/council for deposit amounts

Wisconsin

Maximum deposit equivalent to: No state law

Return deadline: 21 days

Interest on security deposits: n/a

Notes: Check with city/council for deposit amounts

Wyoming

Maximum deposit equivalent to: No state law

Return deadline: 30 days (plus an additional 30 days if there are deductions due to damage)

Interest on security deposits: n/a

Notes: Check with city/council for deposit amounts

Disclaimer

We hope you found this blog interesting! However, do note that the information in this article does not constitute advice. This blog is for general informational and educational purposes only and should not be used as a substitute for competent legal and/or other advice from a licensed professional.

laws by stateSecurity Deposit

Jasmine Delves profile
Jasmine Delves

Jasmine Delves is a Content Specialist at Landlord Studio. She writes on all things rental property management, from renovations and pet policies to tenant screening and income tax rates.

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