Tenants who don't pay rent can completely compromise your rental property's cash flow. Security deposits act as a buffer to protect Council Bluffs, Iowa landlords from bad tenants.
However, tenants have certain rights, and landlords have responsibilities to uphold. Security deposits are only helpful when you follow the law. Find out more about security deposits in Iowa now.
Maximum Security Deposit Amount
Iowa limits how much a landlord can charge as a security deposit. The maximum security deposit amount in the state is equal to two months of rent.
For example, if the rent amount is $1,000 per month, the maximum security deposit amount would be $2,000.
Landlords in Council Bluffs can charge an additional amount as a pet deposit.
However, people with service and emotional support animals are protected by the Fair Housing Act. You cannot charge a pet deposit for people with disabilities.
A property management company can ensure you understand tenant rights.
Security Deposit Storage
Iowa security deposit laws also state that the deposit must be stored in a specific manner. Landlords must store the security deposit away from other funds. Security deposits require their own property accounts.
The security deposit has to be held in a trust account or in a:
- Credit union
- Bank
- Savings and Loan Association
Whatever system you choose must be insured by a federal government agency.
Landlords don't have to provide tenants with a receipt for the security deposit.
Security Deposit Withholdings
Security deposits help mitigate the risk of owning a rental property. Even if you screen tenants, it's possible to end up with a bad one. You can withhold security deposits to restore your property when a bad tenant moves out.
A landlord can withhold some or all of the security deposit when:
- Tenants fail to pay rent
- The unit requires deep cleaning
- The unit requires major repairs
- Tenants fail to pay utility bills
Understanding eviction laws in Iowa is helpful if a tenant continues to fail to pay rent.
Security Deposit Returns
The best landlord advice is to give back the security deposit as soon as possible. A landlord in Iowa has 30 days to return the security deposit from the date of the end of the lease.
If you withhold some or all of the funds, you must send a detailed invoice of why the amount was withheld. You need an itemized list and the fees associated with the items.
Mail the itemized list or security deposit to the tenant's new mailing address. Failure to send the security deposit back on time forfeits your right to keep the security deposit, even if any damage was done.
Let Us Help You With Security Deposits
Security deposits are helpful for landlords but can get them in a lot of trouble. Follow these Iowa security deposit laws to stay compliant.
To outsource this task and others, consider hiring a property management team. PMI of the Midlands is a full-service real estate asset management company providing landlords with the help they need.
For more than 20 years, we've gained experience in real estate and local laws. Contact us today to learn more about our services.
