7 Basics of Oregon's Security Deposit Law

The Rights of Landlords and Tenants in Oregon

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Oregon has unique security deposit rules landlords and tenants must understand. The purpose of these landlord-tenant laws is to educate both sides about the purpose of the security deposit and the consequences if the other side does not live up to their lawful obligations or terms of the lease agreement.

1. Is There a Security Deposit Limit in Oregon?

In the state of Oregon, there is no limit as to the maximum amount a landlord can charge a tenant as a security deposit. It is usual for a landlord to charge a tenant between one month and two months’ rent. This amount allows the landlord to have some cushion if the tenant fails to pay his or her rent or otherwise breaches the lease agreement, but is not so high that it will deter prospective tenants from renting the unit.

In addition, landlords usually cannot change the amount of the security deposit during the first year of tenancy. After the first year, the landlord can increase the amount of the security deposit required but must allow the tenant at least three months to pay the additional deposit.

Exception: If the landlord and the tenant both agree to modify the existing rental agreement for a reason that would require an additional deposit, such as a pet, the security deposit amount can be changed during the first year.

2. How Must You Store the Security Deposit in Oregon?

In the state of Oregon, there is no specific requirement for how a landlord must store a tenant’s security deposit. The deposit is not required to be kept in a separate bank account, nor does it have to accumulate interest.

3. Is Written Notice Required After Receipt of the Security Deposit in Oregon?

Yes. After collecting a security deposit from a tenant, an Oregon landlord is required to provide the tenant with a written receipt. In addition, the security deposit amount must be listed on the lease agreement.

4. What Are Some Reasons You Can Keep a Tenant’s Security Deposit in Oregon?

Landlords in the state of Oregon may be able to keep all, or a portion of, 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.
  • Damages for inability to rent out unit until repairs or cleaning is complete.
  • Carpet cleaning but only if:
    1. The cleaning was done by a machine specifically designed to clean carpets.
    2. The carpet was cleaned right before the tenant moved into the unit.
    3. The rental agreement specifically states that deductions can be taken from the security deposit regardless of whether the carpet was cleaned prior to the tenant moving out of the unit.

    5. Is a Walk-Through Inspection Required in Oregon?

    There is no specific rule in the state of Oregon that requires landlords to perform a walk-through inspection prior to tenant move-out.

    6. When Must You Return a Tenant’s Security Deposit in Oregon?

    • When: Landlords in the state of Oregon must return the portion of the tenant’s security deposit that is owed to the tenant within 31 days of tenant move-out.
    • How: The security deposit must be delivered directly to the tenant by the landlord or the landlord must send the deposit via first class mail to the last known address of the tenant.
    • Itemized Statement: This deposit must be accompanied by a written statement which details  what deductions have been taken from the deposit and the reason for the deduction.
    • Wrongful Withholding: If a landlord fails to provide a written itemized statement or wrongfully withholds a tenant’s security deposit, the tenant may be entitled to twice the amount wrongfully withheld.

    7. What Happens to the Security Deposit If You Sell Your Property?

    In the state of Oregon, if you sell your property or the property otherwise changes ownership, you are responsible for returning all tenants’ security deposits. You can return the portion of the security deposit that is owed to the tenant directly to the tenant. You should alert the new property owner that you have returned all deposits to the tenants.

    You can also elect to transfer all security deposits to the new owner. In this case, you should alert all tenants of the name and address of the new owner and the amount being transferred. The transfer of security deposits is usually done if the tenants are still bound by the terms of their original lease agreement once the property has changed ownership.