Key Takeaways
- Arizona landlords cannot charge more than 1.5 times the monthly rent as a security deposit. Pet deposits are allowed in addition to the regular deposit.
- Property owners must provide residents with move-in forms, copies of the rental agreement, and notice to be present during the move-out inspection to collect security deposits from residents.
- In Arizona, property owners can deduct from the deposit for many reasons including unpaid rent or utilities, damage beyond normal wear and tear, lease violations, etc.
As a landlord in Arizona, if you are not collecting a security deposit from your residents, you could be putting your investment at risk. A difficult resident could move out with unpaid utilities, unpaid rent, and having not fixed negligent property damage, among other issues.
And without having the financial cushion that a security deposit provides, you’d have to foot the expenses yourself. This could be detrimental to your investment’s bottom line.
A security deposit is meant to provide a financial cushion against certain potential negligent actions. When collecting it, though, you must ensure that you strictly follow certain rules. These are outlined under the state’s security deposit laws. In this blog by Keyrenter Gilbert, we’ll walk you through the important basics of this law to ensure you stay legally compliant. As a professional property management company, Keyrenter Gilbert can advise you on how to keep your process compliant with landlord-tenant law and local security deposit law.
Here is a Guide to the Arizona Security Deposit Law
Maximum Security Deposit Limit
Some states don’t impose limits on the amount of security deposits a landlord can charge residents. However, Arizona isn’t one of these states. Landlords must not charge security deposits exceeding the equivalent of 1.5 times the monthly rent.
If the monthly rent is, say, $2,000, then the maximum you could charge for that unit would be $3,000.
There is one exception to the 1.5 times security deposit requirement rule. If renting out a mobile home, you could collect up to two months of rent as a security deposit.
Additional Pet Deposits
Arizona landlords can collect pet deposits from residents in addition to the regular deposit. The only cadre of residents you must exempt from such additional charges are those with service dogs or companion animals.
For such tenants, the Federal Fair Housing Act requires that landlords provide them with reasonable accommodations. Which, among other things, would require you to allow them to move in with their service dogs or companion animals even when your pet policy, if any, prohibits them.
Please keep in mind that the total security deposit amount must not exceed the state’s maximum limit of 1.5 times the monthly rent.
Move-In Inspections
When collecting security deposits from residents, there are certain things you’ll need to provide the resident with.
One, you’ll need to provide them with a move-in form to document the rental unit’s condition. Two, you’ll need to provide them with a copy of the rental agreement. And three, you’ll need to provide the resident with a notice to be present during the move-out inspection.
Security Deposit Holdings
Unlike some other states, Arizona tenant law doesn’t require landlords to store residents’ security deposits separately. Also, there is no requirement that landlords hold them in interest-bearing accounts. Unless the rental unit is a mobile home, in which case, you must provide the resident with a 5% annual interest.
Sale of Rental Property
After a rental unit’s ownership status changes hands, the seller must transfer the deposit to the incoming landlord. The new landlord would then need to handle it in accordance with these security deposit rules.
Security Deposit Deductions
As previously mentioned, landlords can make deductions from residents’ security deposits. In Arizona, the following are the deductions landlords can make.
- Unpaid rent
- Unpaid utilities
- Cost of damage exceeding normal wear and tear
- Damages arising from the resident’s breach of the lease agreement
- Any other charges mentioned in the lease
If the cost of these damages exceeds the security deposit amount, you’re entitled to seek the additional amounts from the resident.
Normal Wear and Tear vs. Damage
Normal wear and tear refers to the gradual deterioration of a property over time. Common examples include faded paint, lightly dirtied grout, lightly scratched glass, and stained bath fixtures. The landlord is responsible for fixing this type of damage.
Damage, however, occurs due to the resident’s negligence, carelessness, abuse, or misuse. Common examples include missing fixtures, holes in the wall, and broken tiles. The resident is responsible for fixing this type of damage before moving out of their rented premises.
After a resident moves out of their rented unit, landlords must return the remaining deposit within 14 days. In Arizona, landlords must send the portion to the resident’s last known address via first-class mail. You must also include a written statement of deductions.
Conclusion
These are all the important basics of the Arizona security deposit rules that you must familiarize yourself with when renting out property anywhere in the state. Check out our other blogs to learn about the Arizona Eviction Process and the Fair Housing Act!
If you have a questions or need expert property management help, Keyrenter Gilbert has you covered! We’re a dependable property management company, serving Gilbert, AZ, that can help sort out all your property management needs. We can help you market the property, screen prospective residents, determine the perfect rent, and more. Get in touch to learn more!
Disclaimer: Please note that the information provided in this blog is intended for general guidance and should not be considered as a replacement for professional legal advice. It is important to be aware that laws pertaining to property management may change, rendering this information outdated by the time you read it.