Minnesota Security Deposit Laws in 2024

Security Deposit Limits in Minnesota

Minnesota state law does not set a maximum limit on the amount a landlord can charge for a security deposit. Landlords have the discretion to charge any deposit amount they deem necessary. 

In practice, most landlords in Minnesota collect the equivalent of 1-2 months' rent for the security deposit. So if the monthly rent is $1,000, the security deposit would commonly be $1,000 - $2,000.

While there is no statewide limit, some individual cities in Minnesota have enacted local ordinances placing a cap on security deposit amounts landlords can charge within their jurisdiction. For example, in Minneapolis the maximum security deposit is equal to 1 month's rent. Renters should check their local laws to see if any deposit limits apply in their city.

Absent a local ordinance, Minnesota landlords can technically charge any security deposit amount they want. However, excessively high security deposits may deter prospective tenants. The lack of a statewide security deposit cap gives landlords latitude while still encouraging reasonable deposit amounts through market forces.

Interest Paid on Deposits in Minnesota

Minnesota law requires landlords to pay interest on security deposits annually. The interest rate must match the rate of interest paid on regular passbook savings accounts by commercial banks. 

Tenants must make a written request to the landlord to receive their annual interest payment. Landlords are not required to pay interest automatically without a request.

The interest is calculated based on the full amount of the deposit, even if some of the deposit was used during the prior year to cover damages or other charges. For example, if the original deposit was $1000 but $200 was deducted for repairs, the interest would be calculated on the full $1000.

Tenants should make their interest requests near the annual anniversary date of when they first paid the security deposit. Landlords then have 30-60 days to send the interest payment after receiving the written request. 

If a landlord fails to pay the requested interest on security deposits, tenants can file a complaint with the Minnesota Attorney General's office. The AG may investigate the landlord and take legal action if warranted.

Returning Deposits in Minnesota

In Minnesota, landlords have 21 days after the end of a lease to return a tenant's security deposit. This includes month-to-month leases that have ended. The 21 days starts after the tenant has fully vacated the unit and returned the keys.

When returning a deposit, the landlord must also provide the tenant with a written statement listing any damages or charges they are deducting from the deposit. If no deductions are being made, the landlord should state that as well. 

If a landlord fails to return a deposit and itemized deduction statement within 21 days, the tenant can sue to recover the full deposit amount, regardless of whether any legitimate deductions existed.

If a tenant does not claim their security deposit within 2 years after moving out, the landlord must turn the funds over to the state as unclaimed property. Former tenants can retrieve unclaimed deposits from the state treasurer's office.

Allowable Deductions from Deposits

Landlords in Minnesota are allowed to deduct money from a tenant's security deposit to cover certain costs and damages at the end of the lease. The key deductions landlords can make under Minnesota law are:

Damage Beyond Normal Wear and Tear

Landlords can deduct money from the deposit to repair or fix any damage to the rental unit beyond normal wear and tear. This includes things like:

• Holes in the walls 
• Broken appliances 
• Stained or damaged carpeting
• Missing fixtures
• Damage to doors and windows

Landlords cannot deduct for minor wear and tear that occurs from normal use of the property over time. The tenant is only responsible for actual damage they cause through negligence, carelessness, or abuse.

Unpaid Rent, Late Fees, and Utilities  

If a tenant still owes rent, late fees, or utility bills when they move out, the landlord can use the security deposit to cover these unpaid costs. The landlord must provide notice and documentation of the amounts owed.

Cleaning Costs if Tenant Left Dirty

Landlords can deduct reasonable cleaning costs from the deposit if the tenant left the unit significantly dirtier than when they moved in. This does not include minor cleaning between tenants. Charges must be for cleaning necessary due to the tenant's actions.

Costs to Re-Rent If Tenant Broke Lease

If the tenant broke the lease early, the landlord can deduct costs related to re-renting the unit like advertising fees. The landlord must make reasonable efforts to re-rent and minimize costs.

Normal Wear and Tear vs. Damages

Landlords are not allowed to deduct from a tenant's security deposit for normal wear and tear. Normal wear and tear refers to the natural aging and minor deterioration that occurs through regular use of the rental unit over time. 

Examples of normal wear and tear that landlords cannot deduct for include:

• Minor scratches or scuffs on floors and walls
• Faded paint and wallpaper
• Worn carpet and flooring
• Chips and dents on countertops 
• Stains that can be cleaned with ordinary effort 

To deduct damages from the security deposit, the landlord must show it is actual damage caused by the tenant's abuse or negligence beyond normal wear and tear. For example, large uncleanable stains, holes in walls, broken appliances, or pet damage would be considered damages.

The key is that normal wear and tear covers the expected decline from normal aging and use, not damage that the tenant caused. Landlords cannot deduct for minor cosmetic issues that come with ordinary habitation of a rental unit. It must be shown that the tenant physically damaged the property in some way through intentional action or irresponsible behavior.

Using Deposit for Last Month's Rent

It is illegal in Minnesota for a tenant to use their security deposit to pay for their last month's rent without the landlord's consent. Even if a tenant uses their deposit for their final month's rent, they are still obligated to pay the full security deposit amount after moving out. The security deposit belongs to the landlord for the duration of the tenancy.

If a tenant does use their security deposit for the last month's rent without permission, the landlord has the right to deduct the amount of unpaid rent from the tenant's deposit. For example, if the monthly rent is $1,000 and the security deposit is $1,500, and the tenant uses the full $1,500 for their last month's rent, they will owe the landlord $1,000 out of pocket to restore the full security deposit amount. Tenants should never assume they can use the deposit for rent unless the landlord has explicitly agreed to it in writing.

Getting Full Deposit Back

Getting your full security deposit back from your landlord when you move out requires planning and diligence on your part as the tenant. Here are some tips for ensuring you get back the maximum amount of your deposit:

Clean thoroughly and do repairs before moving out

This is the most important thing you can do. Spend time deep cleaning the rental unit and repairing any damage beyond normal wear and tear. Pay special attention to the kitchen and bathroom. Clean all appliances, cabinets, floors, walls and fixtures until they are spotless. Fill holes, touch up paint, and fix anything broken. The cleaner you leave the rental, the less justification the landlord has for deductions.

Take date-stamped photos as evidence of condition

Once the rental is cleaned, take photos or video of the entire unit to document the condition you left it in. Take pictures of any repairs you made as well. Make sure the date stamp is turned on. These photos will serve as important evidence if the landlord tries to make false or exaggerated deductions. Email the photos to yourself and to the landlord.

Provide forwarding address for deposit return

When you turn in your keys, provide the landlord with a forwarding address in writing where your deposit should be returned. This starts the clock ticking on their deadline to send an itemized statement and return the deposit balance. Follow up by email as well to confirm they have your new address.

Following this checklist increases your chances of getting 100% of your security deposit back. Don't let your money get unfairly deducted - move out properly and demand your full deposit.

Recouping Wrongfully Withheld Deposits

If a landlord does not return the security deposit or provide an itemized statement of deductions within 21 days after the end of the lease, the tenant has several options to recoup the deposit:

Send a formal demand letter

The first step is to send a formal letter to the landlord demanding the return of the full security deposit within 14 days. The letter should detail the amount of the original deposit, the date it was paid, the date the lease ended, and the landlord's obligations under Minnesota law to return the deposit within 21 days. The letter should be sent via certified mail to create a record.

File in conciliation court

If the landlord does not comply with the demand letter, the next step is to file a claim in conciliation court. This is a special court in Minnesota designed to resolve small claims disputes. The maximum amount that can be recovered in conciliation court is $15,000. Proceedings are informal and do not require an attorney. 

Sue for up to 2x the deposit

If the tenant prevails in conciliation court but the landlord still refuses to return the deposit, the tenant can file a lawsuit in county court. Under Minnesota law, if a landlord wrongfully withholds a deposit the tenant can recover up to 2x the deposit amount in damages. This requires filing a formal complaint and going through the litigation process. Most tenants will need an attorney to successfully navigate a formal lawsuit.

Deposits When Property is Sold 

When a rental property is sold or transferred to a new owner in Minnesota, the tenant's security deposit transfers as well. The new owner inherits the deposit and becomes responsible for returning it to the tenant.

The original landlord who collected the security deposit remains jointly and severally liable for the deposit even after the property changes hands. If the new owner fails to properly return the tenant's deposit, the tenant can still seek the full deposit amount from the original landlord. 

Minnesota law prohibits landlords or new owners from collecting an additional security deposit or imposing a fee when ownership changes. The tenant is only obligated to pay one deposit for the duration of their tenancy. Requiring extra deposits when the building is sold constitutes an illegal fee.

Tenants should make sure to get written documentation of their security deposit transfer when their rental unit's ownership changes. This protects the tenant by showing evidence of the deposit amount paid to the original landlord if issues arise later.

Some things to watch out for when a deposit transfers to a new landlord:

• The new owner claiming no knowledge or record of the deposit
• Being asked to sign a new lease and pay a new deposit
• Not receiving proper credit for interest accrued on the deposit 

Tenants have the right to have their deposit seamlessly transferred to new ownership. As long as they continue renting the unit, their deposit amount and rights remain unchanged.

Frequently Asked Questions

Here are answers to some of the most common questions renters have about security deposits in Minnesota:

What is the limit on security deposit amounts in Minnesota?

Minnesota does not have a legal limit on how much a landlord can charge for a security deposit. Landlords typically collect 1-2 months' rent. See the Security Deposit Limits in Minnesota section for more details.

When must a landlord return a security deposit in Minnesota?

Landlords have 21 days after the end of a lease to return security deposits, along with an itemized statement of any deductions. See Returning Security Deposits in Minnesota for timelines and procedures.

What interest rate do landlords have to pay on security deposits in Minnesota?

The interest rate is the same as for passbook savings accounts. Interest is paid annually. See Interest on Security Deposits in Minnesota.

Can landlords deduct for normal wear and tear in Minnesota?

No, landlords cannot deduct for normal wear and tear like minor scratches or worn carpeting. They can only deduct for actual damages caused by the tenant. Refer to Normal Wear and Tear vs. Damages.

Do security deposits transfer to new tenants in Minnesota?

No, security deposits stay with the rental unit. Deposits transfer to new owners if the property is sold. See Security Deposits and New Owners.

What are the security deposit laws and rules in Minnesota?

The main laws governing security deposits in MN are outlined throughout this guide, including limits, deductions, interest, timelines, and steps to get your full deposit back.

How much can landlords deduct from security deposits in Minnesota?

Landlords can deduct for damages beyond normal wear and tear, unpaid rent/utilities, cleaning costs if dirty, and costs to re-rent if the tenant broke the lease. See Allowable Deductions from Deposits.