Tenant Security Deposit Protections

The act amends and makes additions to existing law concerning security deposits that tenants submit to landlords and the conditions under which a landlord may retain all or part of a security deposit.

For the purposes of security deposits, the act expands the definition of "normal wear and tear".

Under current law, a landlord may not retain a security deposit to cover normal wear and tear and, if actual cause exists for retaining any portion of a security deposit, the landlord must provide the tenant:

• A written statement listing the exact reasons for the retention (written statement); and
• The difference between any sum deposited and the amount retained.

The act states that a landlord may not retain a security deposit to cover any damage or defective condition that preexisted the tenancy and, if the landlord delivers the written statement within fourteen days after a written request by the tenant, the landlord must also deliver any relevant documentation in the landlord's possession or control.

Upon a landlord's or tenant's request, if reasonable and practicable, the act requires a landlord and tenant to conduct a walk-through inspection, either in person or via a telecommunication-assisted interactive walk-through, of the dwelling unit to identify in writing any damage or defective conditions that are beyond normal wear and tear and that did not preexist the tenancy. The landlord must provide a walk-through inspection at a time that is mutually convenient to the parties, before the termination of the lease or the surrender of the premises, and after the tenant has had the opportunity to remove furniture.

A landlord wrongfully withholds a security deposit or any portion of it if the landlord:

• Fails to timely provide the written statement and any required documentation;
• Provides a written statement that fails to list the exact reasons for retaining any portion of the security deposit;
• Fails to timely return the difference between any sum deposited and the amount retained; or
• Retains a security deposit or any portion of it in bad faith.

A landlord retains a security deposit or any portion of it in bad faith if the amount retained:

• Unreasonably exceeds the amount of actual damages;
• Is retained without actual cause;
• Is an amount the landlord knew or should have known exceeded the actual damages; or
• Is retained solely or in part for an unlawful, retaliatory, or discriminatory purpose.

A landlord is presumed to have retained an unreasonable amount of a security deposit if the amount retained is 125% or greater than the amount of the actual damages.

In any court action brought by a tenant under the act, the landlord bears the burden of proving the amount of actual damages the landlord incurred.

Under current law, upon cessation of a landlord's interest in a dwelling unit, the person in possession of a tenant's security deposit must either transfer the security deposit to the landlord's successor in interest or return the security deposit to the tenant within a reasonable time. The act states that this must be done within 60 days after cessation of the landlord's interest in the dwelling unit.

If a landlord's payment refunding a tenant's security deposit or any portion of it is returned to the landlord, the landlord must hold the payment for at least one year after receiving it and must disburse the payment to the tenant within 15 calendar days upon the tenant's request.

A landlord does not have actual cause to retain any amount from a security deposit for the replacement of carpet or painting unless there is substantial and irreparable damage to the carpet, or substantial damage to the paint, that exceeds normal wear and tear and did not preexist the tenancy. If a landlord has actual cause, the landlord may retain only the minimum amount necessary to replace the carpet or to repaint in the area that is damaged. A landlord may not deem carpet substantially and irreparably damaged if it has not been replaced with new carpet within the 10 years preceding the termination of the lease or surrender of the premises.

The act takes effect January 1, 2026.

(Note: This summary applies to this bill as enacted.)