When I lived in California, moving into a rental unit required almost as much in a down payment as buying a house. Landlords often asked for not only the first month’s rent, but the last and an additional security deposit.
In Minnesota, however, it seems to be the rule rather than the exception for landlords to ask for a security deposit equal in amount to one month of rent. To a tenant, this figure represents their last month of rent; creating the misperception that he or she doesn’t owe anything for his last month of tenancy.
As a result, landlords are often faced with the task of explaining to a vacating tenant that their deposit was meant to cover damages and any required repairs, as well as unpaid rent, upon move-out.
Is there a legal limit as to the amount a landlord may require as a security deposit? Not according to Minnesota law. Of course, any duplex owner needs to also be mindful that an excessive amount may cause prospective tenants to choose another property as their home.
It is interesting to not, however, that if a lease is a periodic tenancy, meaning it has no final date mentioned, the security deposit may be increased at any time. Of course, the tenant must be given advanced written notice. On the other hand, if a lease has a definite end date, the security deposit may not be increased.
At the end of the tenancy, the landlord must return the deposit, along with interest, to the tenants. Of course, unpaid rent and any amount necessary to repair damage or pay other debts related to the tenant’s residency may be retained.
Tenants who moved in after August 1, 2003 should be paid one percent interest per year of residency. Tenants who moved in earlier receive much greater interest payments. If residency began between August 1, 1973 and September 30, 1984, tenants receive 5 percent interest. If move0n was between October 1, 1984 and April 30, 1992, it’s 5.5 percent. Between May 1, 1992 and March 21, 1996, residents receive 4 percent interest on their deposits. And those moving in between March 22, 1996 and July 31, 2003 receive 3 percent interest.