Arizona Security Deposit Law for Landlords and Tenants

Posted in Blog  
  on Apr 20, 2016

When you find the perfect apartment, single family home, or other unit to rent, the landlord will typically request a security deposit at the time the lease is signed.

This security deposit may be required to be paid in full or paid in installments over the first few months of the lease. Some tenants may also be asked to pay a first and last month of rent in addition to the deposit amount.

If you are renting in Arizona, then here are the key points of the state's security deposit laws that both landlords and tenants are going to want to know.

1. Landlords are capped at 1.5x the monthly rent for the rental unit.

All funds that are asked for in advance are considered to be a security deposit by the state of Arizona.

This means a requirement to pay the last month of rent is actually considered as the security deposit.

For a $500 apartment, this means the maximum amount a tenant could be charged would be $750. This is irregardless of whatever terminology is used within the rental agreement to describe these funds.

2. There is a 14 day deadline after a claim is made.

Tenants can make a claim for the return of a security deposit even if they do not remember paying one.

When this happens, a 14 day deadline is enforced on the claims that can be made against that deposit.

Without making a demand, a landlord can pursue damage costs for several years after the event took place.

3. Landlords can demand nonrefundable fees.

Landlords in Arizona are permitted to request nonrefundable cleaning fees or other amounts, but only if they are specifically mentioned in the rental agreement as being nonrefundable.

These fees must be outlined in writing for the tenant. Any fee or deposit that is not designated as being nonrefundable is considered to be part of the security deposit instead.

4. Tenants may voluntarily pay more if they wish.

Landlords may not be able to demand more than 1.5x the monthly rent as a security deposit, but tenants can voluntarily pay more if they wish in advance.

5. Tenants can request a joint move-out inspection.

To avoid unnecessary claims against a security deposit, tenants have the right under Arizona law to request a joint move-out inspection.

If a landlord is evicting a tenant for a material breach of the rental agreement and there is a reasonable fear that a tenant may try to use the joint inspection to cause physical harm, then there is no obligation under Arizona law for the landlord to conduct this inspection.

6. Security deposit funds can be applied to unpaid rent.

This can be done with the tenant's permission or it can be included as part of the leasing agreement.

If it is not in writing, however, because prepaid rent is classified as being a security deposit, tenants may wish to receive permission in writing to have these funds applied in such a way. Landlords are also permitted to make claims against the deposit for mitigation costs and other damages they may have suffered due to the breach of contract actions a tenant may take.

7. Landlords have 14 business days to return a security deposit balance.

Landlords must return a security deposit to a tenant who has moved out within 14 business days of the lease termination.

If claims have been made against the deposit, then an itemized list of these claims must be sent with whatever balance remains of the deposit. This deadline does not preclude the landlord recovering other damages which may be above and beyond normal wear and tear, which is a provision which also applied to tenants.

8. Property sales transfer ownership of the security deposit interests.

Whomever is in possession of the landlord's interest in the premises at the termination of a tenancy is bound by the Arizona security deposit laws. This may include a business who is acting as the landlord's agent in rental matters.

9. Any refundable deposit amount can be applied to any applicable lease provision.

If tenants have costs they've agreed to pay under the terms of their lease as part of the process of tenancy termination, then they are permitted to use any refundable deposit amount to pay for those costs as the lease allows.

If there is any remainder of this deposit after all damages and costs have been settled, then the remainder must be refunded to the tenant under the guidelines presented by Arizona law.

The security deposit laws in Arizona are designed to provide clarity to landlords and tenants to what is permitted and what is not permitted for these funds.

This guide is not intended to serve as a substitute for legal advice, so if you have questions about a specific situation, it is best to review section 33.1321 of Arizona law or seek professional legal counsel.


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