Basics of Oregon's Security Deposit Law

The Rights of Landlords and Tenants in Oregon

Man unpacking boxes in new home near bicycle while smiling and looking at smartphone.
••• JGI / Tom Grill / Getty Images

A security deposit is money placed with a landlord to cover any potential damages to the rental unit or a lapse in rent payments. Oregon has some unique security deposit rules. Deposits aren't legally required here, but they're permitted, and statutes offer some other flexibility as well.

Is There a Security Deposit Limit in Oregon?

There's no limit as to the maximum amount a landlord can charge a tenant as a security deposit, but it's common for a landlord to ask a tenant for one to two months’ rent. This amount affords the landlord a cushion if the tenant fails to pay her rent or otherwise breaches the lease agreement, but it's not so high that it might deter prospective tenants from renting the unit.

Landlords usually can't change the amount of the security deposit during the first year of tenancy, but they can increase it after this time. An exception exists if the landlord and the tenant agree to modify the existing rental agreement during the first year for a reason that would require an additional deposit. This might be the case if the tenant acquires a pet, although not a service animal.

Landlords must give tenants at least three months to pay any additional deposit when they've been in residence for more than a year.

Where Must You Keep the Security Deposit?

Oregon has no specific requirement for where how a landlord must keep a tenant’s security deposit. It's not mandatory that the deposit be kept in a separate bank account, nor does it have to accumulate interest.

Is Written Notice Required After Receipt?

An Oregon landlord is required to provide her tenant with a written receipt after collecting a security deposit. The security deposit amount must additionally be cited in the lease agreement.

Landlords cannot accept any money unless and until they've provided tenants with a written accounting of all fees, deposits, and rental payments due. The lease can meet this requirement if all information is included in the document.

When Can a Landlord Keep a Security Deposit?

Landlords in Oregon can keep all or a portion of a tenant’s security deposit for a few reasons, including unpaid rent, damage in excess of normal wear and tear, and other breaches of the lease agreement.

A landlord can also deduct from a security deposit to cover damages incurred because he was unable to rent out the unit until repairs or cleaning were complete. Carpet cleaning can be included in this clause, but only if the cleaning was done by a machine specifically designed to clean carpets and the carpet was also cleaned right before the tenant moved into the unit.

The rental agreement must specifically state that deductions can be taken from the security deposit.

Is a Walk-Through Inspection Required in Oregon?

There's no specific rule that says that Oregon landlords must perform a walk-through inspection prior to tenant move-out, but tenants have a right to request one. They can also bring a third party who doesn't reside in the unit who can additionally witness the condition of the premises.

It's advisable to record the condition of the dwelling in writing and have both the landlord and the tenant sign the document.

When Must You Return a Tenant’s Security Deposit?

Oregon landlords must return the portion of the tenant’s security deposit that is owed within 31 days of the tenant moving out. The security deposit must be delivered directly to the tenant by the landlord, or the landlord can send the deposit via first class mail to the last known address of the tenant.

The deposit must be accompanied by a written statement which details what deductions have been taken and the reason for each deduction. The tenant can sue and might be entitled to twice the amount that was wrongfully withheld if the landlord fails to provide this written, itemized statement or wrongfully withholds a tenant’s security deposit.

What Happens If You Sell the Property?

You're responsible for returning all tenants’ security deposits to the tenants if you sell your property or the property otherwise changes ownership. You should alert the new property owner that you've done so.

You can also elect to transfer all security deposits to the new owner. You should alert all tenants of the name and address of the new owner in this case and the amount that was transferred. This transfer of security deposits usually occurs when tenants are still bound by the terms of their original lease agreement after the property has changed ownership.