Security deposits help protect landlords if a tenant violates the lease agreement. However, every landlord must follow their states landlord tenant laws to make sure they have the right to take deductions from the security deposit. Here are eight basic rules about security deposits in Minnesota
The Basics of Minnesota's Security Deposit Law
- Security Deposit Limit - No Limit
- Storing Deposit - Must Be Placed in Interest Bearing Account
- Collecting Deposit - Must Notify Tenant of Health or Safety Violations or Pending Foreclosure.
- Written Notice - Must Provide Receipt if Tenant Pays Cash
- Keeping Deposit - Unpaid Rent, Damages, Breaches to Lease
- Walk-Through Inspection - Not Required
- Returning Deposit - Within Three Weeks of Tenant Move-Out
- Selling Property - Must Return Deposits to Tenants or Transfer to New Owner
Security Deposit Limit
There is no statewide limit on the maximum amount a landlord in Minnesota can charge a tenant as a security deposit. You should always check with your local town or municipality to determine if additional rules may apply.
Storing the Security Deposit
Security deposits in the state of Minnesota must be stored in an interest-bearing account. The account must bear interest at a rate of one percent per year.
Before accepting a security deposit from a tenant, a landlord must notify the tenant of any outstanding building or health code violations that threaten the health or safety of the tenants. Complete requirements can be found at Minnesota Statute § 504B.195.
In addition, landlords who have been notified of a pending foreclosure on their property may have to notify any tenant or prospective tenant that the property is facing foreclosure. You can consult Minnesota Statute §504B.151 for exceptions to this notification.
Landlord Must Provide a Receipt for Cash Deposit
If the tenant is paying the security deposit in cash, a Minnesota landlord must provide the tenant with a receipt. If the cash deposit is paid in person, the landlord must provide a receipt immediately. If the cash deposit is not made in person, the landlord has three days from receipt of the deposit to provide the tenant with a receipt.
Reasons a Tenant’s Security Deposit Can Be Kept
A landlord may be able to keep all or a portion of a tenant’s security deposit for the following reasons:
- To Cover Unpaid Rent
- Damage in Excess of Normal Wear and Tear
- Other Breaches of the Lease Agreement
In the state of Minnesota, a walk-through inspection is not required when a tenant moves out.
When a Tenant’s Security Deposit Must Be Returned
- When: In Minnesota, a landlord must typically return a tenant’s security deposit within three weeks of tenant move-out. The exception to this rule is if the tenant had to move out because the entire building or the tenant’s unit has been condemned. In this case, the landlord only has five days from tenant move-out to return the tenant’s security deposit.
- How: The landlord must return the tenant’s security deposit, less any allowable deductions, along with any interest that has accrued on the deposit. The deposit must be sent via first-class certified mail to the forwarding address that the tenant has provided or must be delivered to the tenant in person.
- Deductions: If deductions have been made from the deposit, the landlord must provide a written itemized list stating the reasons for the deductions and the amount that has been deducted.
- Wrongful Withholding: Landlords who fail to return a tenant’s security deposit according to these rules or who wrongfully withhold a tenant’s security deposit could be liable for up to twice the amount wrongfully withheld and any interest that has accrued plus $500 in damages.
What Happens to Deposit If You Sell Rental Property
If you sell your property or the property otherwise changes ownership, within 60 days of this change in ownership, you must do one of two things:
- Return the security deposit to the tenant plus any accrued interest
- Transfer the security deposit plus any accrued interest to the new owner and notify the tenant in writing of the name and address of the new owner and the amount being transferred. The tenant has 20 days from this notification to contest the amount being transferred if he or she feels it is incorrect.
Minnesota's Security Deposit Law
For the original text of the law governing security deposits in the state of Minnesota, please consult, Minnesota Statutes Annotated §§ 504B.118, 504B.151, 504B.178 and 504B.195 .