Basics of Oregon's Security Deposit Law
Know the rights of landlords and tenants in Oregon
A security deposit is money held by a landlord to cover any potential damages to a rental unit or a lapse in rent payments. Deposits are not legally required in Oregon, but they are permitted. State statutes offer some other flexibility and differentiate Oregon from other states.
Oregon does not limit how much landlords can collect, but one or two months is common. This affords landlords a cushion if a tenant fails to pay rent or otherwise breaches a lease agreement. It's also not high enough to deter prospective tenants from renting a unit.
Landlords must give tenants at least three months to pay any additional deposit when they've been in a residence for more than a year.
During the first year of tenancy, landlords can change the amount of a security deposit only if they and a tenant agree to modify an existing lease for a reason that would require an additional deposit. For example, if a tenant acquires a pet, an additional security deposit would be permissible.
Storing Security Deposits
Oregon has no requirement for where landlords must keep tenants' security deposits. It's not mandatory they be kept in separate bank accounts, nor do they have to accumulate interest.
Written Notice After Receipt
Oregon landlords are required to provide tenants with written receipts after collecting security deposits. The amount also must be cited in the lease agreement.
Landlords cannot accept any money unless and until they have provided tenants with a written accounting of all fees, deposits, and rental payments due. The lease meets this requirement if all information is included in the document.
Keeping Security Deposits
Landlords in Oregon can keep all or a portion of a tenant’s security deposit for unpaid rent, damage in excess of normal wear and tear, and other breaches of a lease agreement.
Rental agreements must specifically state which deductions can be taken from a security deposit.
Landlords also can deduct from a security deposit to cover lost rent incurred because of being unable to rent out a unit while cleaning or completing repairs. Carpet cleaning can be included only if the cleaning was done by a machine specifically designed to clean carpets and the carpet also was cleaned right before the tenant moved into the unit.
No regulations require Oregon landlords to perform walk-through inspections prior to tenants moving out, but tenants have a right to request one. They also can bring a third party who doesn't reside in the unit to witness the condition of a dwelling.
It's advisable for tenants to record the condition of a dwelling on a document signed by both the tenant and the landlord.
Returning Security Deposits
Oregon landlords must return security deposits, minus any deductions, within 31 days of a tenant moving out. Landlords must deliver deposits directly to tenants or send them via first-class mail to a tenant's last known address.
Deposits must be accompanied by a written statement detailing what deductions have been taken and the reason for each deduction. Tenants can sue and might be entitled to twice the amount that was wrongfully withheld if a landlord fails to provide this written, itemized statement or wrongfully withholds a security deposit.
Selling a Property
Landlords are responsible for returning all tenants’ security deposits if they sell or otherwise transfer ownership of a rental property.
Landlords also can elect to transfer all security deposits to a new owner and should provide all tenants the name and address of a new owner and the amount that was transferred. Transfers of security deposits usually occur when tenants remain bound by the terms of their original lease agreements after a property has changed ownership.