Delaware security deposit law helps landlords manage deposit limits, storage rules, and lawful deductions so they avoid costly disputes or missed deadlines.
This guide gives landlords a clear overview of these regulations by covering maximum amounts landlords can request, how to store deposits, interest requirements, legal grounds for deductions, returning deposits, handling disputes, and more.
Statutes Regulating Delaware Security Deposits
Delaware security deposit rules appear in Title 25, Chapter 55, Section 5514 of the Delaware Code, which outlines how landlords collect, hold, and return residential deposits.
Maximum Security Deposit Amounts Under Delaware Law
Delaware law limits security deposits for most residential leases of 1 year or more to no more than 1 month of rent.
The statute allows higher deposits for furnished rentals or agreements that run for less than 1 year. Delaware does not grant local jurisdictions authority to create deposit caps that override state law.
Security Deposit Storage Regulations
Delaware law requires landlords to place each security deposit in an escrow account at a federally insured financial institution in Delaware or secure the deposit with a surety bond. Landlords must keep these funds separate from personal or business accounts and notify tenants in writing about the institution that holds the deposit.
For example, a landlord cannot place a tenant’s deposit in a personal checking account or in any account located outside Delaware.
Security Deposit Interest in Delaware
Delaware law does not require landlords to place security deposits in interest-bearing accounts, and landlords will never owe tenants interest on those funds.
Making Security Deposit Deductions
Landlords rely on security deposit deductions to keep a rental in good condition. Tenants sometimes owe overdue rent or cause damage beyond normal wear and tear, and landlords need funds to make things right.
When Landlords Can Deduct
Delaware landlords may draw from a tenant’s security deposit for these reasons:
- Repair damage beyond normal wear and tear during the tenancy
- Recover unpaid rent or charges owed under the lease agreement
- Cover cleaning costs needed to return the unit to move-in condition
- Replace items damaged because of tenant misuse or neglect
- Remove abandoned property and handle reasonable disposal expenses
When Landlords Can’t Deduct
Delaware landlords may not draw from a tenant’s security deposit for these reasons:
- Address normal wear that results from everyday and reasonable use
- Pay for upgrades or improvements unrelated to tenant-caused damage
- Repair issues arising from the landlord’s failure to maintain the unit
- Replace fixtures that stop working due to age or expected use
- Charge for issues not included in the required written statement
Necessary Documentation to Accompany Deductions
Delaware law requires landlords to give tenants an itemized list of all deductions taken from the security deposit. This written statement must outline each charge and its cost. Although landlords do not need to include receipts or invoices, sharing them can strengthen the documentation behind the amounts claimed.
What to Do When Deductions are Greater Than the Deposit
Sometimes tenant damage goes beyond the security deposit, and landlords must recover additional costs. Delaware landlords may request payment from former tenants for the remaining balance and should document each charge clearly. Landlords must send the itemized list of deductions within 20 days after the tenancy ends to support any claim for extra funds.
Landlords who cannot collect the remaining amount can hire a collections agency or file a claim through Delaware small claims court in an attempt to collect the debt.
Returning Security Deposits to Tenants
Delaware law outlines clear steps for returning any remaining portion of a tenant’s security deposit after the landlord applies eligible deductions.
Required Timeline for Return
Delaware landlords must return the balance of the deposit and provide an itemized list of deductions within 20 days after the tenancy ends. The 20-day period starts once the tenant vacates and gives possession back to the landlord. Following this timeline protects the landlord’s ability to claim lawful deductions.
Method for Return
Delaware landlords may return the deposit by any reasonable payment method, including cash, check or electronic transfer. When a landlord withholds funds, they must include an itemized list of deductions with the remaining balance.
Penalties for Late Return
If a Delaware landlord misses the 20-day deadline or fails to include the required itemized list, the landlord loses the right to keep any portion of the deposit. The landlord may also owe the tenant double the amount withheld, plus court costs.
Security Deposit Disputes
Tenants who disagree with how a landlord handles their security deposit have the right to raise a dispute. They typically begin by contacting the landlord directly to challenge a decision, and may negotiate further or file a lawsuit to challenge the landlord’s deductions or actions.
As a landlord, prepare for security deposit disputes by using move-in and move-out checklist tools, staying current with accounting and bookkeeping, and including clear terms within your lease agreement. Careful documentation, staying current on Delaware laws, and strict attention to timelines will all help your case.
Using Condition Reports to Document Damage
Landlords in Delaware who handle security deposits gain clarity and protection by using detailed move-in and move-out condition reports to track a unit’s condition, reduce disputes, and support fair deductions.
To do so, use property management software to create digital reports with photos and videos directly from a smartphone. Careful documentation before move-in and after move-out will give you strong evidence and make security deposit deductions far less negotiable.
Sign up for a free TurboTenant account to collect security deposits, track a rental’s condition, and securely store all relevant documentation.
FAQs: Delaware Security Deposit Law
Can a landlord deduct painting from a security deposit in Delaware?
A Delaware landlord may deduct painting costs only when tenant damage goes beyond normal wear and tear. Routine repainting between tenants counts as a landlord expense and does not qualify as a deductible charge.
Are nail holes considered normal wear and tear in Delaware?
Small nail holes caused by everyday use generally count as normal wear and tear in Delaware. Larger holes or excessive wall damage that goes beyond ordinary use may justify a deduction from the tenant’s security deposit.
Does the landlord or tenant have to pay for carpet cleaning in Delaware?
A Delaware landlord cannot charge a tenant for routine carpet cleaning. When a tenant leaves stains, odors, or other damage that exceeds normal wear and tear, the landlord may deduct the reasonable cost of cleaning from the deposit.
What happens if a landlord doesn’t return a security deposit within 20 days in Delaware?
If a Delaware landlord misses the 20-day deadline or does not provide the required itemized list, the landlord loses the right to keep any portion of the deposit and may owe the tenant double the amount withheld (plus court costs).
