Iowa Security Deposit Law
Learn the security deposit limits and regulations in Iowa
Landlords in Iowa are allowed to require a security deposit from their tenants in addition to the monthly rent. This deposit is permitted under Iowa’s landlord-tenant law because it helps protect a landlord in case a tenant breaches the lease agreement. The state of Iowa does have specific rules regarding the security deposit that all landlords must follow. Here are the security deposit limits and regulations in the state of Iowa.
Is there a security deposit limit in Iowa?
Yes. In the state of Iowa, a landlord cannot request more than two months’ rent as a security deposit from a tenant. However, you show always check with your local town or municipality to determine if there are additional or different rules that could apply to you.
How must you store the security deposit in Iowa?
In Iowa, landlords must place a tenant’s security deposit in a separate:
- Bank account,
- Savings account,
- Loan Association,
- Credit Union.
The institution where the account is located must be insured by the federal government. The security deposits cannot be commingled with any of the landlord’s other funds. The account does not have to earn interest, but if it does earn interest, any interest earned on the deposit during the first five years of tenancy belongs to the landlord.
Is written notice required after receipt of the security deposit in Iowa?
No. In the state of Iowa, a landlord is not required to provide a tenant with written notice after receiving that tenant’s security deposit.
What are some reasons you can keep a tenant’s security deposit in Iowa?
In Iowa, a landlord may be able to make deductions from a tenant’s security deposit for the following reasons:
Is a walk-through inspection required in Iowa?
No. Iowa landlords are not required to perform a walk-through inspection of the property prior to a tenant’s move-out.
When must you return a tenant’s security deposit in Iowa?
- When:In the state of Iowa, a tenant has one year from move-out to provide the landlord with a forwarding address where his or her security deposit can be sent or to provide other instruction as to how the security deposit can be delivered. The landlord has 30 days after receiving this notice to return the portion of the security deposit that is owed to the tenant.
- How:The landlord must send the portion of the security deposit owed to the tenant to the forwarding address provided by the tenant or must follow other reasonable instructions the tenant has requested for delivery.
- Itemized Statement:If any deductions have been taken from the security deposit, the landlord must include a written itemized statement detailing these deductions, including the nature of any damages and the approximate cost of repair.
- If a landlord fails to include a written itemized list within 30 days of tenant move-out and receiving delivery instructions, the landlord forfeits his or her right to keep any portion of the tenant’s security deposit.
- No Delivery Instructions:If the tenant does not provide a forwarding address or other instructions within one year of move-out, the security deposit becomes the property of the landlord.
- Wrongful Withholding:If a landlord fails to return the portion of the tenant’s security deposit that is owed to the tenant within 30 days of move-out and receiving the delivery instructions from the tenant, the landlord may be liable to pay actual damages, a maximum of $200 in punitive damages and reasonable court and attorneys’ fees.
What happens to the security deposit if you sell your property?
In the event that you sell your property or the property otherwise changes ownership, it is your responsibility to:
- Transfer all security deposits, after making any allowable deductions, to the new owner of the property. You must then notify the tenant of the name of the new owner, the address of the new owner, and the amount being transferred. The tenant has 20 days after receiving this notice to contest the amount being transferred.
- Return the tenants’ security deposits, less any allowable deductions, directly to the tenants.
What is Iowa's security deposit law?
If you are interested in viewing the text of the law governing security deposits in the state of Iowa, please consult Iowa Code Annotated § 562A.12.