Is there a maximum amount landlords can charge for security deposits?
As a landlord, this is likely a question you've been wondering. Unfortunately, the answer varies depending on the state in which you live.
Although most states have deposit limits, a few states have no limit.
If you're a landlord in the Lake Havasu City area, this short guide is for you. Continue reading to learn the most essential information about Arizona security deposits.
Federal Laws and Regulations
There are only a few federal security deposit laws that landlords must follow. The most notable law that affects security deposits is the Fair Housing Act.
This law prohibits discrimination based on the following:
- Color
- Disability
- Familiar status
- National origin
- Race
- Religion
- Sex
The law pertains to security deposits by requiring landlords to treat all tenants equally when setting and handling security deposit amounts.
Arizona Laws and Regulations
Under Arizona law ARS 33-1321(A), landlords cannot collect a security deposit that is more than 1.5 month's rent. For example, if the monthly rent for an apartment is $2,000, the landlord cannot charge a deposit of more than $3,000.
However, landlords may charge additional fees or deposits related to renting the property if they clearly list it in the lease agreement. Examples of additional fees include:
- Parking fees
- Pet deposit
- Pet rent
- Redecorating fees
You may return some of these fees to the tenant at the end of the lease agreement. If you don't wish to do so, you must specifically list the fees as non-refundable in the lease agreement.
Why Charge Tenants Security Deposits
Security deposits typically protect landlords from significant property damage and rent nonpayment.
However, legally, there are generally five accepted reasons why a landlord would keep part of all of a tenant's security deposit. They are:
- Extensive property damage (not normal wear-and-tear), such as large holes in the walls, broken appliances, or burns in the carpet
- Cleaning costs if a tenant has overtly trashed the property or left furniture the landlord must pay to remove
- Nonpayment of rent to cover back rent payments
- If the tenant breaks the lease
- Unpaid bills, such as utilities
If a landlord keeps part or all of a security deposit, they must provide the tenant with a written, itemized list of what amounts they kept and why.
Collecting and Returning Deposits
It's always best to collect the security deposit at the lease signing or before the tenant begins to occupy the property. Payment methods you can accept include:
- Cash
- Certified checks
- Direct deposit
- Money orders
- Online payment services
After the tenant pays the deposit, provide them with a written receipt detailing the amount paid, date, and purpose.
Further, landlords should store the security deposit separately from their personal or operating funds.
Arizona landlords have 14 business days from the move-out date to return the security deposit to the tenant.
Need Help Managing Your Rental Property?
Collecting security deposits is only one aspect of operating rental properties. Yet, landlords face many more responsibilities and tasks.
If you need help managing your properties, hire a property management company. Our team at Arizona Living Rentals & Property Management provides exceptional customer service to ensure satisfaction.
Contact us today to learn more about our services and how we can assist you.
