Can I Keep a Tenant’s Security Deposit?

Minnesota landlords face steep penalties if not cautious

By Doug Mentes, Esq. | Reviewed by Canaan Suitt, J.D. | Last updated on November 7, 2024

Use these links to jump to different sections:

Minnesota landlords can easily get themselves into trouble with their tenants’ security deposits. Even a simple management mistake, like missing a deadline, could be costly. If a landlord withholds any amount of the security deposit, Minnesota security deposit laws require them to demonstrate that the expenses are legitimate and not ordinary wear. If not, landlords could be subject to civil code fines, penalties, and court costs.

When Can Landlords Keep the Security Deposit?

Minnesota landlord-tenant law allows landlords to keep a tenant’s security deposit in only two circumstances:

  • To cover late or unpaid rent
  • To pay for damages to the rental unit beyond normal wear and tear

Determining what is normal wear and tear is subjective, but landlords should use common sense when assessing whether they or the tenant should be responsible for cleaning costs. For example, painting all interior walls may be normal wear and tear after a five-year lease but not after a one-year lease. Landlords should be able to demonstrate objectively any costs for repairs or maintenance prior to withholding the tenant’s deposit. The renter and landlord should perform a move-out inspection and create an itemized list together to reduce any future disagreements.

Was There Proper Notice?

A common issue in security deposit disputes is whether the landlord or tenant gave the other proper notice to end the tenancy. If the lease agreement is for a definite term and the tenant breaks the lease before the end of the lease, the tenant will owe rent for any remaining months on the lease—or, at least, until the rental can be leased again to new tenants.

Often a lease is stated to end on a specific date, but both the landlord and tenant want the lease to continue. They can agree to another definite lease term, or, often, the landlord and tenant will agree to continue the lease on a month-to-month basis. This is called a tenancy at will. Some landlords and tenants will agree to a tenancy at will at the outset of their lease. It is the default lease term if there is no specific lease term stated between landlord and tenant.

To terminate a month-to-month tenancy, Minnesota state law requires that either party must provide written notice of intent to vacate at least one full rent interval in advance. The rent interval in a month-to-month lease is one month. To be a full interval, the notice must be received by the end of the month previous to the month vacating. For example, if a tenant intends to vacate at the end of June, the tenant must provide notice by the end of May.

When a tenant leaves, they often withhold payment of the last month’s rent in their final month of tenancy and expect the security deposit to serve as payment of the final month’s rent. This is not permitted under Minnesota law.

Timelines for Security Deposit Return

After the tenant has vacated the property and has provided a forwarding address, Minnesota law requires that within three weeks, the landlord either:

  • Return of the security deposit to the tenant, plus 1 percent per annum interest
  • Provide a written explanation and an itemized statement of why the landlord has withheld any portion amount of the deposit along with any remaining security deposit

Minnesota law imposes a harsh penalty on landlords who miss the deadline to mail the tenant a written explanation. The penalty amount is equal to the security deposit. In addition to the that penalty, a landlord that is found to have held tenant’s security deposit in bad faith can be fined another $500.

Getting Challenged in Small Claims Court

Landlords that withhold any portion of a tenant’s security deposit risk being forced to defend that decision in small claims court—even for very small claims. Small claims courts have low-cost filing fees and are set up as an easy way for self-represented litigants to make their case, which is decided by a referee.

Small claims court can be a headache for landlords. Landlords who find themselves in small claims court or experience problems properly handling security deposits should sit down with an experienced Minnesota real estate attorney for legal advice to ensure they avoid these problems in the future. If you’d like more general information about this area of the law, see our landlord and tenant law overview.

Was this helpful?

What do I do next?

Enter your location below to get connected with a qualified attorney today.
Popular attorney searches: Real Estate Civil Litigation Premises Liability
0 suggestions available Use up and down arrow keys to navigate. Touch device users, explore by touch or with swipe gestures.

Related topics

At Super Lawyers, we know legal issues can be stressful and confusing. We are committed to providing you with reliable legal information in a way that is easy to understand. Our legal resources pages are created by experienced attorney writers and writers that specialize in legal content in consultation with the top attorneys that make our Super Lawyers lists. We strive to present information in a neutral and unbiased way, so that you can make informed decisions based on your legal circumstances.

0 suggestions available Use up and down arrow keys to navigate. Touch device users, explore by touch or with swipe gestures.

Find top lawyers with confidence

The Super Lawyers patented selection process is peer influenced and research driven, selecting the top 5% of attorneys to the Super Lawyers lists each year. We know lawyers and make it easy to connect with them.

Find a lawyer near you