OSPIRG's Renters Handbook:
Chapter 4

Chapter 4: The Security Deposit

A. Security Deposits, Fees & Advance Rent

Rental agreements may require the tenant to pay a security deposit, a fee, and/or an advance payment of rent before moving into the dwelling.

A written explanation must be given of the conditions for refunding or keeping the deposit if a rental agreement is not signed.

Always ask for a receipt when you pay a deposit or fee.

Security Deposits

Deposits may be called a damage deposit, a security deposit, or a cleaning deposit. It is the tenant's money which the landlord holds to protect himself if the tenant breaks some part of the rental agreement (e.g., doesn't pay rent, causes damage, or is negligent in keeping the place clean).

A deposit is, by definition, refundable if the tenant meets clearly specified conditions. There is no limit to the amount of deposit a landlord may require. However, the landlord must return the deposit in whole or in part depending on the tenant's compliance with the rental agreement. (See Recovering the Deposit, page 20)

Note: Some landlords use the term non-refundable deposit which is actually a fee.

Protection Against Future Problems

The law does not require the landlord to keep records showing the condition of the rental when the tenant moved in, but it is a good idea for both parties. When you move in, make complete records, including:

• a receipt showing that you paid the deposit(s);
• a copy of any written agreement;and
• >a record of the condition of the unit. (See Inventory and Condition Reports, page 17, and the sample in Appendix A)

Fees

Fees are a charge for some services performed by the landlord. A fee may be refundable, unless it is clearly designated as non-refundable. The law does not put any limit on the amount or type of fees charged. (90.302)

Fees should be noted as such in writing (in the contract, a receipt, etc.), and the tenant should know what is being paid as a fee and what as a deposit.

Some examples of fees are: application, screening, cleaning, pet privileges, parking, storage, lease cancellation, late rent, bounced checks, etc. If a fee is for a service, a tenant may be able to save
some money by persuading the landlord to let him/her perform the service. If the landlord agrees, it should be in writing.

Advance Rent

Rental agreements may call for either "a month in advance," or "first and last month in advance," or a "deposit on the last month's rent."

Note: Sometimes rent may be increased before the tenant pays the last month's rent. The tenant must then make up the difference between the advance rent paid and the new rent.

When a tenant pays "first and last in advance," he still pays rent at the beginning of each month but has already paid for the last month as a kind of deposit. In a lease, it is a good idea to specify when the last month will be, for example, "April, 1998."

Do not confuse deposits and prepaid rent, and get itemized receipts for any prepaid rent. Use and accounting of advance rent is the same as for deposits. (See Recovering the Deposit, below)
If a tenant terminates the agreement early as a result of the landlord's breach of contract (see <I>Tenant Remedies for Lack of General Repairs</I>, page 32; Disclosure, page 15; <I>Unlawful and Dangerous Rentals</I>, page 38) all unused prepaid rent may be returned. This rule applies to both term and month-to-month agreements.

Keep all receipts and clear records so that you know what has been paid and for what!

B. Recovering the Deposit

A landlord must return any unused portions of a deposit within 31 days after the tenant has moved out, (90.300) provided that the tenant has done all of the following:

• paid all the rent on time;
• given suitable notice of termination;
• returned the keys; and
• left the unit in good repair.

The landlord must also deliver, within the same period, a written statement of the amounts and reasons for all deductions the landlord is taking from the deposit.

Note: If a tenant doesn t get a refund because the landlord or the post office didn't have a forwarding address, the court will not hold the landlord responsible.

The amount that the landlord can deduct from the deposit is limited to the reasonable amount needed to:

• remedy the tenant's defaults in the performance of the agreement (i.e. unpaid rent); and
• repair damages to the premises caused by the tenant, not including normal wear and tear. (90.300(4))

When you move out, leave the unit as clean as it was when you moved in, and get the landlord or reliable witnesses to inspect it with you. The list below covers areas for which landlords frequently deduct if they are not clean:

• bathroom, walls, fixtures, floors, and all tiled areas;
• kitchen, including range, refrigerator, cabinets, counter, sink and floor;
• closets;
• furniture;
• floors, perhaps including shampooing rugs, sweeping balconies, and scrubbing linoleum and wood; drapery rods, drapes; and<
• ashes removed from fireplace.

You are not required to leave the place cleaner than you found it, but this list contains details which landlords often claim are overlooked by tenants.

If there is a deposit and a cleaning fee, the tenant is not responsible for cleaning whatever the fee is for (i.e., if it is for rugs, you don t need to clean the rugs). The landlord may not charge both a fee and a deposit for the same cleaning.

"Normal Wear & Tear"

The tenant must leave the unit in the condition he found it, minus normal wear and tear. Normal wear and tear often include worn-out rugs, furniture, and sometimes paint. Broken windows or furniture, cigarette burns, and dirty kitchens or bathrooms are not normal wear and tear.

Tell the Landlord You're Moving

Often the landlord is not available to inspect the dwelling. In that case, plan ahead, send a letter which outlines your planned cleaning and lists any damage. If you send it early enough, it could be part of your 30-days notice. The letter might look like the following:

Date:

Dear__________,

I plan to vacate__________________on___________________.
This letter is the 30-days' notice I am required by law to send you.

I recently inspected my dwelling and found the following damage, beyond normal wear and tear, for which I am responsible and will not be repairing: .

With the exception of the damage listed above, I believe the dwelling will be left in as good a condition as it was when I rented it, minus normal wear and tear. I
believe I am entitled to a refund of $_________ of my deposit.

If you disagree with my estimate, please contact me to arrange an inspection as soon as possible. Please mail my refund and an itemized accounting within 31 days (as required by law) to:_____________________________.

I am sending this notice by first class mail, and have added 3 days to the 30-day notice period.

(or - "I am hand delivering this notice." )

Sincerely,

Hand deliver or send the letter by first class mail 3 days before the 30-day period begins to make sure the landlord receives the notice on time. If mailed, the notice should state that 3 days have been added to the 30-day period. The tenant can get a "certificate of mailing" from the post office for proof of the date of postage.

Note: It is illegal to make the return of a deposit contingent on a tenant's remaining for a specified length of time (e.g., "The deposit is refundable if you stay longer than 6 months.") (90.300 (5)) However, this does not prohibit a non-refundable fee for such a purpose.

Interest on the Deposit

Oregon does not require the landlord to pay interest to you on your deposit. If the rental is managed by a real estate licensee, all interest earned on the deposit (except prepaid rent) goes to a fund administered by the Oregon Housing and Community Services Department. (458.350) The fund is used to provide housing for low- income people.

C. Unreturned or Misused Deposits

The landlord has 31 days to return the deposit or provide an accounting. If the landlord fails to do so, the tenant may get twice the amount:

• withheld without a written accounting; or
• withheld in bad faith.

If the landlord refuses to return the deposit or neglects to provide the tenant with an accounting within 31 days, the tenant may sue in Small Claims Court.

Contesting Use of the Deposit

If the tenant disagrees with the landlord's accounting, he should discuss it with the landlord. If a negotiation cannot be reached, the tenant may contest it in court. This situation could arise if:

• the landlord has provided what the tenant feels to be a wrong accounting; or
• the landlord introduces a wrong accounting in court to contest the tenant's claim that the deposit was not returned.

The tenant should be prepared to show exactly how the unit was left and to prove that the items claimed by the landlord were either:

• not done as claimed; or
• not necessary because the tenant had already done them; or
• were not the tenant's responsibility because such work had not been done upon moving in

If the landlord gives an accounting in good faith and refunds an amount which the court finds to be less than the tenant should have received, the court should award the tenant the difference.

Penalty: Tenants can receive up to twice the amount that should have been refunded if the court finds that the landlord withheld the money without an accounting or in bad faith (including an accounting which was made in bad faith).

The landlord may, however, assert any claim for damages against the tenant. For example, a tenant may be entitled
to $300 because the landlord failed to refund a $150 deposit and gave no accounting, while the landlord could argue that the $300 should be reduced because the tenant broke a window which cost the landlord $75 to repair.

OSPIRG Renter's Handbook Table of Contents