Ever been left wondering what’s fair when it comes to security deposits in Arizona?
The rules around security deposits in Arizona are there to protect both sides, but they can be confusing if you don’t know what to look for. Let’s dive into the key points in the Arizona security deposit law article that every tenant and landlord in Arizona must know to stay on the right side of the law.
Understanding Security Deposits in Arizona
In Arizona, security deposits are a standard part of rental agreements, offering landlords protection against potential damage, unpaid rent, or other lease violations. While they are not intended to be a fee or cost for renting, they serve as a safeguard for landlords in case of issues with the property or tenant obligations.
Allowable Security Deposit Amount
In Arizona a landlord can ask for up to one and one-half month’s rent as a security deposit.
There is no requirement to keep the security deposit in an escrow account, but a best practice for landlords is to designate a separate bank account for security deposits if you have multiple properties that you manage. Remember to always provide a move-in inspection that you conduct with your tenant to document any existing damage at the start of the rental term.
Provide a written inspection checklist (LeaseRunner has one) and make sure that both the landlord and tenant sign the move-in inspection checklist.
So, can landlord charge more than security deposit?
In Arizona, a landlord cannot charge more than the allowed security deposit amount for a residential rental. The maximum security deposit a landlord can charge is typically one and a half times the rent for a rental property. For example, if the rent is $1,000 per month, the maximum security deposit would be $1,500.
However, landlords can charge additional fees beyond the security deposit such as nonrefundable fees. We’ll examine it in the next part!
Nonrefundable Fees and Deposits
Sometimes, landlords may charge nonrefundable fees and deposits for specific purposes. These fees are not returned to the tenant at the end of the lease, regardless of the property’s condition or whether the tenant complies with the terms of the lease. It's important for tenants to distinguish between Arizona law security deposit refund and nonrefundable charges to avoid confusion.
Some common types of nonrefundable fees:
- Application Fees: Landlords often charge an application fee to cover the cost of screening potential tenants.
- Pet Fees: Some landlords charge a nonrefundable pet fee to cover potential damage or cleaning costs related to pets living in the rental property.
- Cleaning Fees: This covers general cleaning expenses for the property after the tenant vacates, ensuring the unit is ready for the next renter.
- Administrative Fees: Certain landlords impose nonrefundable administrative fees for services like lease processing or preparing the rental unit for move-in. These fees are usually specified in the lease agreement.
Move-Out Inspection and Security Deposit Return in Arizona
In Arizona the tenant has a right to be present for the move out inspection.
Before the tenant moves out, conduct a final inspection of the property with them. During this inspection, point out any damage beyond normal wear and tear and give the tenant the opportunity to make repairs to avoid deductions from their security deposit. It’s helpful to document these findings in writing.
After the tenant moves out, conduct another inspection of the property and document any damage that exceeds normal wear and tear. Be sure to take pictures as evidence. Keep in mind that the tenant is not allowed to use the security deposit to cover the final month’s rent, but landlords can apply it to unpaid rent, late fees, and attorney’s fees, as well as physical damage to the property.
This statement, along with any remaining balance of the deposit, must be sent to the tenant within 14 days of move-out, excluding weekends and legal holidays. Before moving out, the tenant must provide the landlord with a forwarding address.
Penalties for Non-Compliance
Landlords in Arizona must adhere to specific rules and timelines when handling security deposits. Failure to comply with these regulations can result in penalties that benefit tenants.
- Failure to Return the Deposit on Time: Arizona security deposit law requires landlords to pay security deposit return Arizona within 14 business days of the tenant moving out, excluding weekends and legal holidays. If the landlord does not meet this deadline, they may be liable to pay the tenant double the amount of the security deposit.
- Failure to Provide an Itemized Statement: When deductions are made from the security deposit, landlords must provide the tenant with a detailed, itemized list of those deductions. Failure to issue this statement within the 14-day window may result in the tenant receiving the full deposit back, regardless of any damages or unpaid rent.
- Improper Use of the Deposit: Landlords are prohibited from using the security deposit for purposes other than covering damages beyond normal wear and tear or unpaid rent.
Updates to Arizona Security Deposit Laws (2024)
There have been some updates and clarifications to Arizona's security deposit laws in 2024. These updates are designed to provide more transparency and fairness for both tenants and landlords:
- Although the law still mandates that security deposits be returned within 14 business days, updates have emphasized that the 14-day window excludes weekends and legal holidays.
- Landlords are now required to provide a more detailed itemized list of any deductions from the security deposit. This includes specifying the cost of repairs, cleaning, or unpaid rent.
- Arizona law now more clearly defines non-refundable fees, such as application and pet fees, and ensures these are not mistaken for refundable security deposits.
- With an increase in digital transactions, Arizona’s 2024 update highlights the use of electronic payment systems for security deposits and rent.
Summary
The key to handling Arizona security deposit law is simplicity and fairness. With the right knowledge from our article, you’ll avoid complications and create a more positive rental experience.
