For landlords in Arizona, security deposits are akin to safety nets. By requiring a tenant to pay it, they essentially guarantee themselves protection against any liabilities their tenant may cause. At least, to some extent.
Arizona, much like other states, has a security deposit law in place. It’s contained in the statewide landlord-tenant laws. As a landlord, it’s crucial that you familiarize yourself with it to help avoid potential legal issues.
The following is a basic overview of the Arizona security deposit laws.
How Much Security Deposit Can You Charge a Tenant in Arizona?
As a landlord, you are required to charge your tenants no more than 1.5x the monthly rent as a security deposit. The only exception to this is if they actually agree to pay more.
So, suppose you charge a monthly rent of $1,000. In such a case, the maximum you may ask from your tenants as a security deposit would be $1,500. Remember, don't charge tenants more because of bias towards their characteristics as this is a breach to the Fair Housing Act.
Can a Landlord Be Able to Charge a Deposit That Is Non-Refundable?
Yes, a landlord may be able to charge a non-refundable security deposit under landlord-tenant laws. But to do that, you must put it in writing. Failure to do that and, by default, all of the tenant’s deposit will be deemed refundable at the end of their lease term or if they legally break the lease.
In addition, you must state the purpose of the funds. A good example of a non-refundable fee is a pet deposit. The purpose of asking for a security deposit from your tenant would be to help cater for potential pet damage.
Are There Any Specific Rules in Arizona in Regards to Where You Must Store a Tenant’s Security Deposit?
No specific rules exist for storing security deposits. As a landlord, you are free to put the security deposit in any financial institution you may desire.
As a matter of fact, you may be able to use part or all of the deposit to cover certain situations spelled out in the lease agreement. However, you must make sure you return the security deposit to the tenant once they choose to leave.
Do Landlords Need to Notify Their Tenants of the Receipt of Their Deposit?
Receipts for security deposits after depositing them aren't required unless it's stated in the lease agreement. That being said, most landlords still do it anyway. In the notice, they notify the tenant about things like:
In what way the landlord can use the security deposit
Where it is being stored
Are Arizona Tenants Entitled to a Walk-through Inspection?
Yes, tenants have a right to be present during a walk-through inspection. That right is only valid, though, if the tenant informs the landlord of that desire well in advance.
Arizona landlords have a right not to allow a tenant to be present in two situations. These are if you fear your safety may be in jeopardy or if you’re in the process of evicting the tenant.
A walk-through inspection or move-out inspection helps check for any excessive damage, beyond normal wear and tear, the tenant may have caused to the rental property. For example:
Chips and burns in laminate countertop
Broken bathroom tiles
Drawings on walls or unapproved painting by the tenant
Stained carpet and linoleum
In all these cases, Arizona landlords would be able to deduct the appropriate costs of fixing them from security deposits. Note, however, that they cannot make deductions to security deposits in the case of normal wear and tear.
Examples of normal wear and tear include:
Loose door handles
A garbage disposal that stops working because the motor died
Faded or blistered paint
Worn carpet and linoleum
Normal wear and tear occurs as a result of the gradual degradation of the rental unit. As such, the landlord is responsible for fixing them and not the tenant. The landlord must return the security deposit.
In Which Circumstances May You Be Able to Keep Part or All of a Tenant’s Deposit?
There are certain circumstances in which you may be able to keep part or all of a tenant’s deposit. The situations are as follows:
In case the tenant moves out without paying all the utilities in their name
In case of unpaid rent for reasons that aren’t justified, as unpaid rent breaks the lease agreement
If a tenant causes excessive property damage
If the tenant, when moving out, leaves the rental property in a dire state of uncleanliness
When Must a Landlord Return the Tenant’s Security Deposit?
The landlord must return the tenant’s deposit within 14 days of the tenant moving out. Note that this timeframe doesn’t include holidays or weekends.
You must send the tenant the deposit by first-class mail to their last known address. An exception to this is if the tenant has made another arrangement with you or the tenant has provided you a different mailing address.
If you’ve made deductions to the deposit deposits, you must include an itemized list alongside the remaining portion of the deposit. The list must state two things: the reason for the deduction and the cost of repair.
What Must a Tenant Do in Order to Get Their Security Deposit?
First and foremost, tenants must notify landlords of their intention to vacate their rented property. The notice must be written, and they must deliver it either in person or via certified mail.
And secondly, tenants must request the return of their security deposits from their landlords a few days prior to moving out. Again, the notice must be written, and include a forwarding address.
What Must a Landlord Do in the Event They Sell the Rental Property in the Middle of an Active Lease?
The incoming landlord will become responsible for the tenant’s security deposit. That is, in regards to storing it, a landlord must make appropriate deductions (if any) and return it to the tenant.
Do Exceptions to Arizona's Security Deposit Laws Exist?
Yes, an exception does exist. The landlord’s employees are exempt from the statewide security deposit laws. Examples of such employees include the maintenance crew or the property manager who may live in the property if it's multi-unit.
Can the Landlord be Penalized for Failing to Follow the Security Deposit Laws?
Yes. Failure to adhere to the security deposit laws can have serious consequences. In addition to being held liable for certain damages by the court, you also risk getting fined up to two times the security deposit amount for wrongfully withholding security deposits and going against the lease agreement. Never refuse to return the security deposit without checking the legal details.
Disclaimer: The information herein isn’t a substitute for professional legal advice. If you need further help, please hire expert legal services. An experienced property management company may also be helpful.