1998 Minnesota Statutes

     504A.241 Security deposits; damages. 

    Subdivision 1.    Applicability.  A deposit that is 
 intended to secure the performance of a residential lease or any 
 part of such a lease is governed by this section.  This section 
 does not apply to a deposit that is exclusively an advance 
 payment of rent.  

    Subd. 2.    Interest.  (a) A security deposit must be 
 held by a landlord for a residential tenant and must bear simple 
 noncompounded interest at the rate of three percent per year 
 until May 1, 2001, and four percent per year thereafter.  
 Interest must be computed from the first day of the next month 
 following the full payment of the deposit to whichever of the 
 following dates is earlier: 

    (1) the last day of the month in which the landlord, in 
 good faith, complies with subdivision 3; or 

    (2) the date on which judgment is entered in a civil action 
 involving the landlord's liability for the deposit. 

    (b) An interest amount less than $1 is not included in the 
 computation. 

    (c) A security deposit is not considered a trust fund as 
 defined in section 82.17, subdivision 7. 

    (d) The reversion of the interest rate to four percent in 
 paragraph (a) is subject to review by the legislature in the 
 1998 session.  

    Subd. 3.    Return of security deposit.  (a) A landlord 
 shall return the security deposit to the residential tenant, 
 with interest as provided in subdivision 2, or furnish to the 
 residential tenant a written statement showing the specific 
 reason for withholding the deposit or a portion of it within the 
 following periods: 

    (1) three weeks after termination of the tenancy and 
 receipt of the tenant's mailing address or delivery 
 instructions; or 

    (2) five days after the date when the residential tenant 
 leaves the building and receipt of the tenant's mailing address 
 or delivery instructions if the tenant leaves due to the legal 
 condemnation of the building in which the tenant lives for 
 reasons not due to willful, malicious, or irresponsible conduct 
 of the residential tenant. 

    (b) The landlord is considered to have complied with the 
 time requirement of paragraph (a) if the deposit or written 
 statement is placed in the United States mail as first class 
 mail, postage prepaid, in an envelope with a proper return 
 address, correctly addressed according to the mailing address or 
 delivery instructions furnished by the residential tenant, 
 within the time required by paragraph (a).  The landlord may 
 withhold from the deposit only amounts reasonably necessary: 

    (1) to remedy residential tenant defaults in the payment of 
 rent or of other funds due to the landlord pursuant to an 
 agreement; or 

    (2) to restore the property to its condition at the 
 commencement of the tenancy, ordinary wear and tear excepted. 

    (c) In an action concerning the deposit, the burden of 
 proving, by a fair preponderance of the evidence, the reason for 
 withholding all or any portion of the deposit is on the landlord.

    Subd. 4.    Termination of landlord's interest.  (a) 
 Upon termination of the landlord's interest in residential 
 property, the landlord or the landlord's agent must take one of 
 the actions described in paragraph (b) either within 60 days of 
 termination of the interest or when the successor in interest is 
 required to return or otherwise account for the deposit to the 
 residential tenant, whichever occurs first.  Either action 
 relieves the landlord or successor in interest from further 
 liability with respect to the deposit.  Termination of the 
 landlord's interest in the property may occur by sale, 
 assignment, death, appointment of receiver, or otherwise. 

    (b) The landlord must: 

    (1) transfer the deposit, or any remainder after lawful 
 deductions made under subdivision 3, plus interest as provided 
 in subdivision 2, to the landlord's successor in interest and 
 notify the residential tenant of the transfer and of the name 
 and address of the successor in interest; or 

    (2) return the deposit, or any remainder after lawful 
 deductions made under subdivision 3, plus interest as provided 
 in subdivision 2, to the residential tenant. 

    (c) Upon termination of the landlord's interest in the 
 property, the landlord's successor in interest has all of the 
 rights and obligations of the landlord with respect to the 
 deposit except that if the residential tenant does not object to 
 the stated amount within 20 days after written notice of the 
 amount of deposit being transferred or assumed, the obligation 
 of the landlord's successor to return the deposit is limited to 
 the amount contained in the notice.  The notice must contain a 
 stamped envelope addressed to the landlord's successor and may 
 be given by mail or by personal service.  

    Subd. 5.    Damages; penalty.  (a) A landlord who fails 
 to comply with subdivision 3 or 4, paragraph (a) or (b), is 
 liable to the residential tenant for damages that are double the 
 amount of the deposit withheld by the landlord plus interest as 
 provided in subdivision 2. 

    (b) A landlord who in bad faith retains any portion of a 
 deposit or interest in violation of this section is liable for 
 punitive damages not to exceed $200 for each deposit in addition 
 to the damages provided in paragraph (a).  If the landlord has 
 failed to comply with subdivision 3 or 4, retention of a deposit 
 is presumed to be in bad faith unless the landlord returns the 
 deposit within two weeks after the beginning of an action for 
 recovery of the deposit.  

    Subd. 6.    Withholding rent to recover deposit.  (a) A 
 residential tenant may not withhold payment of all or any 
 portion of rent for the last payment period of a residential 
 lease on the grounds that the deposit should serve as payment 
 for the rent.  This prohibition does not apply to an oral or 
 written month-to-month lease where neither the renter nor the 
 landlord has served a notice to quit. 

    (b) Withholding rent as described in paragraph (a) creates 
 a rebuttable presumption that the residential tenant withheld 
 the last payment on the grounds that the deposit should serve as 
 payment for the rent. 

    (c) A residential tenant who remains in violation of this 
 subdivision after written demand and notice of this subdivision 
 is liable to the landlord for damages in an amount equal to: 

    (1) the portion of the deposit that the landlord is 
 entitled to withhold under subdivision 3, other than to remedy 
 the residential tenant's default in the payment of rent under 
 subdivision 3, paragraph (b), clause (1), plus interest on the 
 deposit as provided in subdivision 2, as a penalty; and 

    (2) the amount of rent withheld by the residential tenant 
 in violation of this subdivision.  

    Subd. 7.    Where to bring action to recover deposit.  
 An action, including an action in conciliation court, for the 
 recovery of a deposit on rental property may be brought in the 
 county where the rental property is located, or at the option of 
 the residential tenant, in the county of the landlord's 
 residence.  

    Subd. 8.    Waiver not allowed.  Any attempted waiver of 
 this section by a landlord and residential tenant, by contract 
 or otherwise, is void and unenforceable.  

    Subd. 9.    Applicability.  (a) This section applies 
 only to tenancies beginning or renewed on or after July 1, 1973. 

    (b) For the purposes of this section, tenancies at will are 
 considered to be renewed at the beginning of each rental period. 

    HIST: 1998 c 253 s 27,79