Can landlords charge non-refundable security deposits?

Understanding Security Deposits and Non-Refundable Fees in Minnesota Rental Agreements

When renting a home or apartment in Minnesota, tenants often encounter various fees required by landlords at the beginning of a lease. One common question tenants have concerns whether landlords are allowed to charge non-refundable security deposits. Knowing your rights can help you avoid unnecessary costs and ensure that your rental experience complies with Minnesota law.

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Can Landlords Charge Non-Refundable Security Deposits in Minnesota?

In Minnesota, the term "security deposit" specifically refers to a sum of money that a landlord holds during tenancy to cover damages, unpaid rent, or other lease violations. By law, security deposits are intended to be refundable—minus any legitimate deductions for damages or unpaid balances once the tenant vacates the property.

• Minnesota law does not allow landlords to charge non-refundable security deposits.

All security deposits must be refundable.

• Any fees that landlords intend to keep regardless of damages or other conditions cannot be labeled or considered "security deposits."

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Minnesota Statutes Governing Security Deposits

According to Minnesota Statute §504B.178:

• A landlord may require a tenant to pay a security deposit to secure performance of the lease.
• The security deposit must be held in trust and returned to the tenant, less any lawful deductions, within 21 days after the tenant moves out.
• The landlord must provide an itemized list of damages or unpaid amounts deducted from the deposit.
• Security deposits cannot be withheld arbitrarily or indefinitely.

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Clarifying the Difference Between Non-Refundable Fees and Security Deposits

While landlords in Minnesota cannot charge non-refundable security deposits, they may impose other fees that are non-refundable, provided they are clearly differentiated from the security deposit:

• Application fees: It is common for landlords to charge application fees to cover screening, credit checks, or background investigations. These fees are non-refundable but are not security deposits.
• Pet fees: Sometimes landlords charge a one-time non-refundable pet fee or pet rent separate from the security deposit.
• Cleaning fees: If agreed upon in the lease, some landlords may charge a non-refundable cleaning fee; however, these must be explicitly disclosed and distinguished from the security deposit.

Important: These non-refundable fees cannot be considered or labeled as "security deposits," which must always remain refundable under Minnesota law.

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Tenant Protections Related to Security Deposits in Minnesota

As a tenant in Minnesota, it is important to be aware of your legal protections regarding security deposits:

• Written Receipt: Upon payment, the landlord must provide a written receipt for the security deposit.
• Deposit Limits: Minnesota law does not specifically cap the amount a landlord can require for a security deposit, but customary practice limits it to the equivalent of one or two months’ rent.
• Interest on Deposits: Some Minnesota cities require landlords to pay interest on security deposits held for a certain period. Tenants should check local ordinances.
• Return Deadline: Landlords have 21 calendar days after the tenancy ends to return the security deposit or a written explanation of deductions.
• Disputes: If a tenant believes the landlord wrongfully withheld the deposit, they may pursue remedies through mediation or the courts.

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Best Practices for Tenants Regarding Security Deposits

To protect your rights in Minnesota, consider the following:

• Request clarification on all fees before signing your lease: ask which are refundable security deposits and which are non-refundable fees.
• Keep records of all payments—including receipts or canceled checks.
• Document the property condition at move-in and move-out with photos or videos to avoid disputes about damages.
• Obtain the landlord’s forwarding address to ensure you receive your security deposit refund.
• Review your lease carefully for any clauses related to fees and deposits; anything contrary to Minnesota law invalidates the non-refundable security deposit.

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Summary

In Minnesota, landlords cannot charge non-refundable security deposits. Security deposits must be refundable and handled in compliance with statutory requirements. While landlords can charge non-refundable application fees or pet fees, these must be clearly separated from deposits. Understanding the distinctions and your tenant rights can help avoid confusion and ensure a fair renting experience.

If you believe a landlord has improperly charged a non-refundable security deposit, you may consider contacting a local tenant advocacy group or seeking legal advice to protect your interests.