Are you a landlord in Utah and require tenants to pay a security deposit? If you do, then you should be aware of the state’s security deposit laws.
Understanding your rights and obligations regarding security deposits can help protect you in case you find yourself embroiled in a legal tussle with your tenant. You may also want to check with your local municipality for any additional rules that may apply.
In today’s blog, we’ll go through everything you need to know regarding Utah security deposit laws. But first…
Benefits of Collecting a Security Deposit
When you collect a security deposit, you’re able to cushion yourself against a myriad of potential issues that can significantly impact your bottom line. Such issues include:
- Unpaid utility bills.
- Excessive cleaning costs.
- Failure by the tenant to pay rent.
- Costs incurred when a tenant violates the lease agreement.
- Costs incurred when a tenant causes excessive property damage.
A Guide to Utah Security Deposit Laws
These are the rules that you must strictly follow when renting out a property in Utah. Failure to do so can have severe financial and/or legal repercussions for you.
Security Deposit Limit
Utah doesn’t place any limits on the maximum amount you can charge a tenant as a security deposit. Although, you should still be mindful to not overcharge the tenant.
Because, if you do, you may make your property less desirable to prospective tenants and therefore have a hard time filling a vacancy. As a general rule of thumb, don’t charge anything beyond the equivalent of two months’ rent as a deposit.
Non-Refundable Security Deposits
You can charge non-refundable deposits as long as you clearly state what portion of the deposit isn’t refundable in the lease agreement. You must also ensure the tenant has read the statement and signed the document.
Examples of non-refundable deposits you can charge your tenant include pet deposits and cleaning fees.
Storing a Tenant’s Security Deposit
Some states have specific requirements for how a landlord has to store a tenant’s deposit. Utah, however, doesn’t require landlords to store their tenants’ security deposits in any particular way.
Security Deposit Deductions
Utah law allows landlords to make deductions in various situations, including to cover unpaid rent in the case of eviction or in some cases of early lease breakage, costs to clean the unit, and damage exceeding normal wear and tear.
The following are answers to some commonly asked questions in this regard.
- What is considered normal wear and tear? This is the expected damage that occurs to a unit over time. Examples include lightly scratched glass, gently worn carpets, stained bath fixtures, and loose door handles. As the landlord, you’re responsible for the cost of these repairs.
- What is considered damage exceeding normal wear and tear? This means destruction that occurs to a property due to abuse, misuse, carelessness, or negligence. Examples include missing tiles, holes in the wall, and broken tiles. The tenant is responsible for the cost of repair.
- Can a landlord charge a tenant for carpet replacement? Yes, Utah law allows this. The damage to the carpet must, however, exceed normal wear and tear. Such as pet stains, burn marks, holes or tears, or grease or oil stains.
- Can a landlord charge for nail holes? Yes, if that results in damage to the walls. Large holes often result from drilling, large nail holes, multiple nail holes, and holes made for hanging heavier things.
- Can a landlord charge a tenant for the cost of cleaning the unit after they have moved out? Yes, this is permissible under Utah laws. There is a caveat, though. The charge must be specifically stated in the lease agreement.
- Can a landlord charge a tenant for the cost of repainting the unit? Yes, as long as the damage caused to the painting was beyond normal wear and tear. Such damage includes deep scratches, stains, and that resulting from water damage.
Walk-Through Inspection
Utah law doesn’t require landlords to perform a walk-through inspection before a tenant can vacate the unit. Nonetheless, you may still want to do them due to their benefits. They can help you document the property’s condition before the tenant can leave.
The tenant will then know what repairs (if any) would need to be done before moving out.
Returning a Tenant’s Security Deposit in Utah
State law is specific on what actions a landlord must take when returning a tenant’s security deposit.
- Written Itemized Statement. You must prepare a written itemized statement whenever making deductions to a tenant’s security deposit. You must then send the statement alongside the remaining portion to the tenant’s forwarding address.
- Forwarding Address. The tenant bears the responsibility of providing you with their correct forwarding address. They must provide the address within 30 days of moving out.
- Returning a Tenant’s Deposit. Once a tenant leaves, you must return their deposit (or whatever remains) within 30 days.
- Wrongful Withholding. Failure to return the deposit within the specified time may have certain financial repercussions. You may need to pay the tenant the full security deposit, plus up to $100 in court costs.
Sale of the Property
If the property’s ownership changes hands, you’ll have two options to consider in regard to a tenant’s security deposit. The first option is to transfer the deposit to the new owner, with less allowable deductions. The other option is to return the deposit to the tenant, less allowable deductions.
Bottom Line
Now you’re well versed with the Utah security deposit law. If you have a question or need expert management of your rental property, then look no further than Reside Rentals. Get in touch to learn more about how we can help you maximize profits and minimize stress!