Tenants' Security Deposit Rights in Iowa

What Is the Limit and What Deductions Can a Landlord Take?

Picture of Tenants' Security Deposit Rights in Iowa
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The security deposit rights in Iowa are defined in Iowa’s landlord tenant law. Under this law, landlords are allowed to collect a security deposit from their tenants in addition to the monthly rent required. If the tenant follows the lease and does not cause damage, their security deposit will be returned in full at the end of tenancy. Learn the basic rules Iowa landlords and tenants must follow.

Two Month Security Deposit Maximum

Iowa landlords can require a maximum security deposit amount from their tenants that is equal to two months' rent. For example, if the monthly rent is $750, the landlord can collect a maximum of $1500 as a security deposit.

This is the statewide security deposit limit. You show always check with your local town or municipality to determine if there are additional or different rules that could apply to you.

Rules for Storing Iowa Security Deposits

Separate Account:

  • Tenants security deposits must be placed in a separate:
    • Bank account,
    • Savings account,
    • Loan Association, or,
    • Credit Union.
  • Tenants' security deposits can be placed in the same account.
  • The landlord cannot put any other money, such as rent or personal funds, into this account.

Interest:

Security deposits in Iowa are not required to earn interest. If the account does earn interest, this interest is the property of the landlord for the first five years of tenancy.

Are Iowa Landlords Required to Provide Written Receipt?

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.

4 Reasons Deductions Can Be Taken in Iowa

Even though the security deposit is the property of the tenant, there are legal reasons under Iowa's law that a landlord may be allowed to deduct money from this deposit. An Iowa landlord may be able to make deductions from a tenant’s security deposit for the following reasons:

  • Unpaid Rent
  • Damage in Excess of Normal Wear and Tear
  • Other Breaches of the Lease Agreement
  • Costs incurred from recovering possession of a unit that a tenant has refused to surrender

Do Iowa Tenants Have the Right to a Walk-Through Inspection?

Iowa landlords are not required to perform a walk-through inspection of the property prior to a tenant’s move-out. If a landlord and tenant agree to conduct one, there is no law that prohibits walk-through inspections.

30 Days to Return Security Deposit in Iowa

One Year to Provide Forwarding Address:

  • In 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.

30 Day Return:

  • After receiving a tenant's forwarding address, the landlord has 30 days to return whatever portion of the security deposit that is owed back to the tenant.

How to Return Deposit:

  • 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 which includes:

  • The type of damage
  • 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.

Must Transfer or Return Deposit When Selling Property

A landlord that sells the rental property must either:

  1. Transfer all security deposits, after making any allowable deductions, to the new owner of the property. The landlord 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.
    1. Or
  2. Return the tenants’ security deposits, less any allowable deductions, directly to the tenants.

What is Iowa's Security Deposit Law?

If you want to view the text of Iowa's security deposit law, please see Iowa Code Annotated § 562A.12.