Landlords can require a security deposit on all rental properties within the state of North Dakota.
The amount of this deposit is restricted to one month's rent, however, unless there is a pet involved. An additional pet security deposit may also be charged, which is treated just as the initial security deposit.
If a rental unit is returned to a landlord in a condition that meets or exceeds the condition of when the tenant took possession of it, then the pet deposit and security deposit must be fully refunded.
Here are some of the other guidelines that are in place for security deposits in North Dakota.
1. Service Animals Do Not Qualify As Pets.
North Dakota requires landlords to allow service animals on all properties.
A pet security deposit cannot be charged for these animals as they are classified as a pet under the law.
Landlords are allowed to require documentation from a tenant's medical provider which describes the need for a service animal or their medical order for the service animal as evidence that someone isn't trying to cheat the system.
2. Pet Deposits Allow For Up To $2,500 To Be Requested In a Security Deposit.
When a pet is permitted on a rental property, then in North Dakota it is permissible to request up to a $2,500 security deposit – no matter how much the monthly rent happens to be.
The state allows for up to 2x the monthly rent to be charged as a security/pet deposit, however, so a rental unit at $1,500 per month allowing a pet could charge $3,000.
3. Security Deposits In North Dakota Are Required To Earn Interest.
Landlords must keep a security deposit in an account at a financial institution where it will earn interest.
If the landlord-tenant relationship lasts for 9 months or more at one rental unit, then the interest earned becomes part of the deposit and must be returned with any remaining funds when the tenant moves out of the property.
For rental contracts less than 9 months, a landlord is not required to pay the interest a deposit was able to earn.
4. Landlords Have 3 Reasons To Withhold Funds From a Security Deposit.
The funds from a security deposit can be used to repair damages that a tenant or their guests caused to a rental property.
It can also be used to pay unpaid rent or to pay the costs of cleaning the property after a tenant leaves and there is no evidence of it being professionally cleaned.
Normal wear and tear cannot be charged against a deposit and depreciation rules may apply. For example: if a carpet is 10 years old and it fully depreciated at 7 years, then replacing the carpet may not be able to be taken out of the security deposit despite damage to it.
That is because it was already beyond the age of its expected replacement.
5. A Security Deposit Can Be Held Until a Lease Is Fully Terminated.
If two people sign a lease and pay a security deposit, but one of the tenants moves out before the end of the agreement, the landlord is not bound to pay a “share” of the security deposit to the tenant who moved out.
Landlords are permitted to hold the full security deposit until the lease terminates.
6. Tenants Do Not Forfeit The Right To Their Funds.
If a tenant fails to provide a forwarding address to their landlord upon moving out, then an itemized list of any deductions to the deposit and the payment of any balance remaining must be mailed to the tenant's last known address.
This could be the rental unit that was just vacated. Landlords are also permitted to hand-deliver this list and the balance of funds if they know the location of the tenant.
7. Tenants Can Pursue Damages Of Up To 3x The Amount Of The Security Deposit.
In the example above of a $3,000 security deposit, let's say the landlord sees some damage to the home and fixes it. They don't get the itemized list of repairs and the remainder of the check in the mail until 45 days have passed. This makes the landlord liable for damages of up to $9,000 if the tenant sues them for the return of the deposit because they missed the return deadline.
This guide to the North Dakota security deposit laws is not intended to be a substitute for legal advice.
Always perform your due diligence in any matter you are facing and seek legal help as needed to resolve your landlord or tenant situation.
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