Common Myths about the Security Deposit

Security Deposits in the residential setting are often misunderstood. Tenants sometimes leave before the lease term is up, pinning the landlord with unpaid bills and property damage. On the other hand, landlords sometimes incorrectly use the deposit to improve or upgrade their property.

In Minnesota, statute 504B.178 contains the most guidance on the appropriate use of the deposit. It expressly states that a landlord may keep portions of the deposit to account for unpaid rent or fees. In addition, the legislature has adopted an “ordinary wear and tear” standard, which states that a landlord may use the deposit to repair any damage that is beyond such ordinary wear and tear. However, “ordinary wear and tear” has been ill-defined, and over the years has been open to interpretation. This has led to many myths and misconceptions. Here are some of the most common:

As a landlord, I can keep the tenant’s security deposit to update my property.
False. It is inappropriate to use a deposit to pay for anything other than repairs beyond ordinary wear and tear. A common example is replacement of flooring. The landlord may charge the tenant for damage that was directly caused by the tenant, such as pet damage or scratches. However, all flooring needs care or replacement from time to time. If the kitchen linoleum has simply seen too many years, the landlord must pay for the cost of replacement. Unless otherwise agreed to, updating or upgrading a property is always the responsibility of the landlord.

A landlord can’t use a security deposit to cover cleaning costs.
False. A landlord can use a deposit to cover the cost of cleaning an unusually dirty home. Most leases require the tenant to do a thorough cleaning prior to move-out. If the tenant fails to clean adequately, and the landlord is forced to arrange for cleaning, that cost may be deducted from the deposit.

A landlord can’t deduct utility bills from a tenant’s security deposit.
False. A landlord may deduct any unpaid bills, including rent, late fees, or key replacement fees, from the security deposit.

As a tenant, I can use my security deposit as my last month’s rent.
False. The purpose of the security deposit is to insure the landlord against property damage caused by the tenant. If the deposit is spent on the tenant’s last rental payment, there is often nothing left to cover the cost of repairs. Unless expressly written in the lease or otherwise agreed, a security deposit may not be used to pay the last month’s rent.

The security deposit is the only way the landlord get the tenant to pay for repairs.
False. If the deposit is inadequate to cover the cost of any repairs to the property, and if the damage was directly caused by the tenant, the landlord has a right to bill the tenant for the additional costs. If necessary, the landlord can sue the tenant in conciliation court to recover the costs of the repair.

It’s important to remember that whether the landlord intends to keep the deposit or not, the landlord must notify the tenant in writing or return the deposit within 21 days after the end of the tenancy.

Whether a landlord can keep a security deposit always depends on the individual circumstances. To learn more about how the law affects your unique situation, contact our team.

Written by WFJ | Posted April 2, 2020