Delaware Security Deposit Collections & Holdings

Delaware Security Deposit Collections & Holdings

Last Updated: April 3, 2023 by Ashley Porter

Quick Facts Answer
Maximum / Limit Usually One Month’s Rent
Receipt Requirement None
Inventory Requirement None
Interest Requirement None

To learn about laws on security deposit returns in Delaware, click here.

Maximum Security Deposit Allowed in Delaware

Delaware law limits the maximum security deposit to one month’s rent  if the lease term or tenancy is one year or longer. However, some situations have different rules.

Exceptions. Different security deposit limits apply for a:

  • Federally-assisted housing program: Federal rules apply
  • Lease term shorter than one year: No limit
  • Furnished rental unit: No limit
  • Tenant with a pet: Landlord can add an additional one month’s rent

If a tenant on a month-to-month lease stays in the rental unit for longer than one year, the landlord must return any portion of the security deposit to ensure no more than one month’s rent is held.

Mobile Homes. The maximum security deposit for a mobile home is one month’s rent regardless of the length of the lease term and whether the home is furnished. However, landlords can add one month’s rent if the tenant has a pet.

Increasing the Security Deposit. If a landlord increases the security deposit by more than 10% of the monthly rent (when permitted to do so), they must prorate the payment:

  • Month-to-month: Prorated over 4 months
  • Other lease terms: Prorated over the term of the rental agreement

Can Landlords Charge an Additional Pet Deposit in Delaware?

In Delaware, landlords can charge a pet deposit, except for service dogs and emotional support animals. However, the additional pet deposit cannot exceed one month’s rent, regardless of the length of the lease term.

How Much Rent Can a Landlord Collect Upfront in Delaware?

There is no limit on the amount of rent that can be collected upfront in Delaware. Prepaid rent is not considered part of the security deposit.

Security Deposit Collections in Delaware

When collecting a security deposit, landlords in Delaware must disclose the name and location of the bank account where the deposit will be held.

Do Landlords Have to Provide a Receipt for the Security Deposit in Delaware?

While landlords in Delaware must provide a disclosure to tenants indicating where the security deposit will be held, an additional receipt of the deposit is not required to be provided.

What Obligations Do Landlords Have to Establish the Condition at Move-in in Delaware?

Delaware law does not have specific obligations before a tenancy. While other states like Washington have pre-tenancy obligations like a written inventory of damages, Delaware does not.

Security Deposit Holdings in Delaware

Landlords in Delaware must hold security deposits in a federally-insured bank with an office in the state. The deposits must be kept separate from the landlord’s own funds and cannot be used in the operation of any business by the landlord.

If a landlord fails to hold the security deposit in a bank account or disclose the location within 20 days’ written request by the tenant, they forfeit the full deposit. If the landlord fails to return the deposit and another 20 days pass, the tenant can sue for twice the deposit.

Are Tenants Entitled to Interest on Their Security Deposit in Delaware?

Delaware law does not require landlords to provide interest on held security deposits.

How Are Security Deposits Accounted for in Delaware?

Security deposits are not considered taxable income when they are collected.

What Happens to a Security Deposit When the Property is Sold in Delaware?

Delaware law does not regulate the handling of a security deposit when a property is sold. However, the landlord in possession of the security deposit must handle it according to the applicable rules.

Sources

Security Deposit Collections in Other States