Generally, a security deposit is relevant when landlords and tenants are entering a lease agreement. Both landlords and tenants should know Wyoming’s security deposit law that governs the landlord-tenant relationship. The state’s security deposit law lends specific protections to both landlords and tenants.
Quick Facts for Wyoming
- Maximum Amount: No limit
- Duration for Return: 30 days after end of lease, or within 15 days of receiving mailing address
- Other Return Requirements: Itemized list of any damages
- Penalty for Late Returns: Landlord will pay the full deposit, plus any court costs
The Purpose of a Security Deposit
Security deposits serve as a safety net for landlords should they suffer financial losses caused by the tenant doing damage to the rental property, or a breach of the lease agreement, or unpaid rent.
Security Deposit Maximum in Wyoming
The state of Wyoming has no established maximum amount that a landlord can charge a tenant for a security deposit.
Notice of Non-refundable Deposit
A lease agreement should specify whether any portion of a tenant’s security deposit is nonrefundable. A written notice of this fact should be provided to the tenant at the time the deposit is accepted by the landlord/agent (WY Stat § 1-21-1207).
Returning the Security Deposit
A landlord must provide a tenant with the balance of any deposit and prepaid rent, along with a written itemization of any deductions and the reason for each deduction within 30 days after the termination of the rental agreement or within 15 days after receipt of the tenant’s new mailing address, whichever is later. The refunded deposit and written accounting must be delivered or mailed to the tenant.
- Property Damage: If there is damage to the rental unit, this period must be extended by 30 days. The tenant must notify the landlord within thirty(30) days of termination of the rental agreement of the location where payment and notice may be made or mailed (WY Stat § 1-21-1208(a)).
- Utilities Deposit: After the termination of the rental agreement, property or money held by the landlord and separately identified as a utilities deposit must be refunded to the tenant within 10 days of a satisfactory evidence shows that the tenant has paid all utility charges. If evidence isn’t provided within 45 days of termination, the landlord may apply the utilities deposit to the outstanding utility balance owed by the tenant after 15 days. Seven(7) days after the utility deposit has been applied to the tenant’s utility balance, the landlord must provide the tenant with any refund due, or within 15 days after the landlord has received the tenant’s new mailing address, whichever is later (WY Stat § 1-21-1208(b)).
Landlords can keep all, or a portion of a tenant’s security deposit to cover the following deductions (WY Stat § 1-21-1208(a)):
- Unpaid Rent
- Damages to the rental unit beyond reasonable wear and tear
- Cleaning costs as agreed under rental agreement
- Other costs provided by any contract
Failure to Comply With Refund Requirements
If a landlord/agent unreasonably fails to comply with the refund requirements, the tenant may recover the full deposit, plus court costs. If in a court action brought by a tenant, the landlord wins the case on the basis that the court finds that the landlord acted unreasonably by suing, the landlord may be awarded court costs, plus additional damages (WY Stat § 1-21-1208(c)).
Last Month’s Rent
A security deposit is not intended to be used to cover a tenant’s last month’s rent, but the provision can be established in the rental agreement.
How to Get a Full Refund of Security Deposit
At the end of the tenancy, a full security deposit can be returned to the tenant if there is no damage to the rental property, rent is paid in full, all charges in the rental agreement are covered.
Security Deposits and Tax Filing
What happens to the deposit at the end of the tenancy determines how it is treated for tax purposes.
- Accounting for Security Deposits: Security deposits are treated as either assets or liabilities when filing taxes. Tenants shouldn’t deduct security deposits as expenses and landlords shouldn’t declare them as income when in escrow intended to be returned to the tenant.
- Security Deposit Write-off: If a landlord withholds part or all of the security deposit for losses, that amount should be included as income when filing taxes. Forfeited deposits should be declared as income.
“Normal Wear and Tear” vs. Damage
- “Normal wear and tear” is deterioration that occurs as a result of everyday use of the rental unit, and without negligence, carelessness, accident, or misuse or abuse by the tenant.
- “Damage” refers to destruction to the rental unit that occurs because of abuse or negligence by a tenant during the course of the tenancy and can affect usefulness, value, normal function of the rental unit.
Property Change Ownership
If a rental property changes ownership, a Wyoming landlord must either:
- Transfer the tenant’s security deposit to the new owner and notify the tenants in writing of the transfer and of the new owner’s name and address; or
- Return the deposits to the tenants directly and notify the new owner that the security deposit has been returned to the tenants.
Tips for Wyoming Landlords on the Right Practices for Security Deposits
- Charge tenants a security deposit amount that is appropriate in the absence of a statutory limit
- Provide tenants with an itemized list of deductions and the reason for each
- Return security deposits within 30 days after the termination of the rental agreement or within 15 days after receipt of the tenant’s new mailing address, whichever is later
- Withhold security deposits for unpaid rent, damages to the rental unit, cleaning costs and other costs provided by any contract
- Seek damages in legal proceedings if the security deposit is insufficient to cover the losses caused by the tenant
It’s beneficial for both landlords and tenants to know and understand Wyoming’s security deposit law. Landlords are required to remain in compliance with the state’s security deposit law. Tenants have a duty to adhere to their lease obligations, and in so doing, can get a refund of their security deposit at the end of their lease term. Wyoming security deposit statutes can be found in WY Stat § 1-21-1207 and 1-21-1208.