A landlord can require a tenant to deposit a sum known as a security deposit. A security deposit is for purposes other than the payment of rent. The rental agreement should specify the amount of the security deposit and what it may be used for. If the security deposit can be used for payment of rent, the rental agreement and/or the deposit receipt should clearly indicate this. The security deposit cannot be used to cover normal wear and tear. Normal wear and tear means the deterioration that occurs based upon the use for which the rental unit is intended and without negligence, carelessness, accident, misuse, or abuse of the premises or contents by the tenants, their family or their guests.
A landlord who finds it necessary to use a security deposit is required to provide the tenant with a signed statement as to expenditures required, the amount retained and the purpose for which the amount retained was used. The statement and the remainder of the security deposit, if any, or the full deposit, must be given to the tenant within twenty-one (21) days after the tenant surrenders the premises. If both the landlord and the tenant have previously agreed, this period can be extended up to thirty (30) days, but no longer.
If the landlord refuses to comply with the requirements concerning a security deposit, the tenant can require compliance. The tenant must first give the landlord notice, in writing, of the violation and demand compliance. The landlord must be allowed three (3) days to refund the deposit or provide the necessary statement. If the landlord does not comply, the tenant can then institute a formal legal proceeding to require the landlord to refund the security deposit. This lawsuit can be brought either in the district court or in small claims court. If the action is brought in small claims court, the damages sought cannot exceed $3,000. If the tenant is successful, the court may, at its discretion, award damages up to the amount of three times the security deposit.