Arizona landlords benefit immensely when they understand Arizona’s security deposit law, as knowing the rules can prevent collecting the wrong amount, improperly storing funds, or facing tenant disputes over deductions.
In this guide, you’ll learn everything needed to navigate these regulations, including maximum amounts landlords can request, how to store deposits, interest requirements, legal deductions, returning deposits, resolving disputes, and more.
Statutes Regulating Arizona Security Deposits
Arizona’s security deposit rules are set out in A.R.S. Section 33-1321 of the Arizona Residential Landlord and Tenant Act, which governs how landlords collect, store, and return deposits.
Maximum Security Deposit Amounts Under Arizona Law
Arizona landlords must cap refundable security deposits at 1.5 months of rent for each residential lease, regardless of type or length. Landlords may collect additional nonrefundable fees, but they must label those amounts as nonrefundable within the lease to stay compliant.
Security Deposit Storage Regulations
Arizona law does not set rules for how landlords must store security deposits, which gives property owners freedom to hold these funds in any secure manner they choose. The state does not require landlords to store deposits in separate accounts, make interest payments, or give tenants storage notices, provided they keep accurate records and handle deposits with care.
Security Deposit Interest in Arizona
Arizona landlords do not need to place security deposits in interest-bearing accounts. State law also does not require landlords to pay tenants interest (even if they earn it), which gives property owners flexibility in how they manage these funds.
Making Security Deposit Deductions
Security deposit deductions help landlords protect the long-term health of a rental property. Tenants sometimes miss rent or leave damage beyond normal wear and tear, and landlords rely on deposit funds to cover these expenses.
When Landlords Can Deduct
Arizona landlords may draw from a tenant’s security deposit for the following reasons:
- Repairing damage beyond normal wear and tear that harms the rental
- Covering unpaid rent or other amounts owed under the lease
- Addressing cleaning needs when tenants leave the unit excessively dirty
- Repairing damage that results from tenant negligence or misuse
- Managing costs linked to lease violations that create financial loss
When Landlords Can’t Deduct
Arizona landlords may not draw from a tenant’s security deposit for the following reasons:
- Addressing deterioration that counts as ordinary wear and tear
- Covering repairs for issues the landlord failed to maintain
- Charging for cleaning when the unit meets normal cleanliness standards
- Billing tenants for routine maintenance required during the tenancy
- Collecting fees or charges is not permitted in the signed lease
Necessary Documentation to Accompany Deductions
Arizona landlords must give tenants an itemized list of deductions that explains each charge taken from the deposit. State law does not require landlords to issue receipts or invoices, but many choose to include them, as documentation supports the listed costs and helps prevent disputes.
What to Do When Deductions are Greater Than the Deposit
Tenants sometimes leave behind damage that costs more to fix than the security deposit covers, and landlords must attempt to collect the remaining balance directly from the former tenant. Arizona law requires landlords to send the itemized list and any remaining deposit within 14 business days, after which they may pursue the outstanding amount through standard collection efforts.
Landlords who still cannot recover the balance may enlist the help of a collection agency or file a claim in their jurisdiction’s Arizona small claims court.
Returning Security Deposits to Tenants
Arizona law outlines clear rules for how landlords must return any remaining security deposit funds after lawful deductions, which helps ensure tenants receive accurate refunds within the required timeframe.
Required Timeline for Return
Arizona landlords must send an itemized list of deductions and any remaining deposit within 14 business days after the tenancy ends and the tenant returns possession of the rental back to the landlord. The clock starts ticking once the tenant vacates the rental and returns the keys back to the landlord.
Method for Return
Arizona landlords must return the deposit by first-class mail to the tenant’s forwarding or last known address (unless the tenant requests a different method). Landlords must include an itemized list of deductions with the refund or, if no money remains, provide the list alone to explain how the entire deposit was applied.
Penalties for Late Return
If a landlord misses the 14-business-day deadline or fails to provide the itemized list, Arizona law allows the tenant to pursue the amount wrongfully withheld plus damages up to twice the original deposit amount. These potential penalties encourage landlords to follow both the refund timeline and all documentation requirements.
Security Deposit Disputes
If a tenant disagrees with how a landlord handles their security deposit, they have every right to raise a dispute. Most tenants begin by requesting clarification in writing, and if the issue remains unresolved, they may seek mediation or take the matter to small claims court.
As a landlord, prepare yourself for security deposit disputes by using move-in and move-out checklists, staying current with accounting and bookkeeping, and placing clear terms surrounding deposits in your lease agreement. Strong documentation, detailed photos, a firm grasp of Arizona laws, and attention to timelines will also go a long ways in preventing disputes.
Using Condition Reports to Document Damage
Landlords in Arizona will inevitably find themselves in fewer tenant disputes when they use move-in and move-out condition reports. With condition reports, landlords can detail the property’s condition before move-in and after move-out, document issues as they arise, and make security deposit decisions with far more confidence.
Many landlords use property management software to create digital reports, complete with photos and videos, directly from their smartphones. When landlords document the property in detail, they establish a clear basis for legitimate security deposit deductions, leaving far less room for debate.
Sign up for a free TurboTenant account to generate condition reports and make security deposit deductions with ease.
FAQs: Arizona Security Deposit Law
Can a landlord deduct painting from a security deposit in Arizona?
A landlord in Arizona may deduct painting costs only when a tenant leaves damage that goes beyond normal wear and tear. Routine repainting that comes with regular turnover does not qualify, but heavy markings, stains, or intentional damage can justify withholding part of the deposit.
Are nail holes considered normal wear and tear in Arizona?
Small nail holes from typical picture hanging usually count as normal wear and tear in Arizona, so landlords cannot deduct for them. Larger holes, wall anchors, or damage that requires extra patching or repainting may rise to the level of deductible damage.
Who has to pay for carpet cleaning in Arizona, the landlord or the tenant?
A landlord in Arizona cannot deduct for routine carpet cleaning when a tenant leaves the rental in reasonably clean condition. If the tenant leaves behind heavy dirt, stains, or damage requiring professional cleaning or repair, the landlord may use the deposit to cover those costs.
What happens if a landlord doesn’t return a security deposit within 14 business days in Arizona?
If a landlord misses the 14-business-day deadline to return the deposit and provide the itemized list, the tenant may pursue the amount withheld plus damages up to twice that figure. Arizona law gives landlords a strong incentive to follow the refund timeline exactly.
