| Quick Facts | Answer |
| Maximum / Limit | 2 Months’ Rent |
| Receipt Requirement | None |
| Inventory Requirement | None |
| Interest Requirement | Usually None |
To learn about laws on security deposit returns in Iowa, click here.
Some cities and counties may have regulations which are more restrictive than those presented here. Always check local laws.
Maximum Security Deposit Allowed in Iowa
Iowa law limits the maximum security deposit to two months’ rent.
Can Landlords Charge an Additional Pet Deposit in Iowa?
Yes, landlords can collect an additional pet deposit in Iowa, except for service dogs and emotional support animals. However, the total security deposit cannot exceed two months’ rent. Landlords cannot exceed the limit by giving them another name like “pet deposit” or “damage deposit.”
This law does not prevent landlords from adding a monthly pet premium.
How Much Rent Can a Landlord Collect Upfront in Iowa?
There is no limit on the amount of rent that can be collected upfront in Iowa. Many states have a limit on the amount of rent that can be collected at once, but Iowa does not.
Security Deposit Collections in Iowa
While other states have additional requirements for landlords that collect a security deposit, such as providing certain documentation of the condition of the unit at move-in, Iowa does not.
Do Landlords Have To Provide a Receipt for the Security Deposit in Iowa?
Although some states like Washington require a receipt, landlords are not required to provide a receipt for the security deposit in Iowa.
What Obligations Do Landlords Have To Establish the Condition at Move-in in Iowa?
Iowa law does not require landlords to document or establish the property’s condition at move-in. While other states legally require a written inventory of damages to be completed when collecting a security deposit, Iowa does not.
Security Deposit Holdings in Iowa
Landlords in Iowa must hold security deposits in a trust account or a federally-insured bank, credit union, or savings and loan association. Security deposits cannot be commingled with the landlord’s own funds.
Are Tenants Entitled to Interest on Their Security Deposit in Iowa?
Landlords in Iowa are not required to hold security deposits in interest-bearing accounts. If they choose to do so, the interest that accrues during the first five years of the tenancy belongs to the landlord.
If a security deposit is held in an interest-bearing account for more than five years, any interest that accrues during the sixth and later years belongs to the tenant.
How Are Security Deposits Accounted for in Iowa?
Security deposits are not considered taxable income when they are collected.
What Happens to a Security Deposit When the Property is Sold in Iowa?
When a property is sold in Iowa, the landlord must (within a reasonable time) either:
- Transfer the security deposit to the new owner and notify the tenant in writing; or
- Return the security deposit to the tenant
In either case, the original landlord can make any allowed deductions first. If they make deductions and transfer the deposit to the new owner, they must notify the tenant in writing of the amount transferred (after deductions) and the new owner’s name and address.
The notice must include a stamped envelope addressed to the new owner. If the tenant does not object to the amount within 20 days, the new owner is only liable to the tenant for the amount transferred.
Sources
- 1 Iowa Code § 562A.12(1)
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A landlord shall not demand or receive as a security deposit an amount or value in excess of two months’ rent.
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- 2 Iowa Code § 562A.6(12)
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“Rental deposit” means a deposit of money to secure performance of a residential rental agreement, other than a deposit which is exclusively in advance payment of rent.
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- 3 Iowa Code § 562A.12(2)
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All rental deposits shall be held by the landlord for the tenant, who is a party to the agreement, in a bank or savings and loan association or credit union which is insured by an agency of the federal government. Rental deposits shall not be commingled with the personal funds of the landlord. Notwithstanding the provisions of chapter 543B, all rental deposits may be held in a trust account, which may be a common trust account and which may be an interest-bearing account. Any interest earned on a rental deposit during the first five years of a tenancy shall be the property of the landlord.
Source Link - 4 Iowa Code § 562A.12(5) & (6)
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5. a. Upon termination of a landlord’s interest in the dwelling unit, the landlord or an agent of the landlord shall, within a reasonable time, transfer the rental deposit, or any remainder after any lawful deductions to the landlord’s successor in interest and notify the tenant of the transfer and of the transferee’s name and address or return the deposit, or any remainder after any lawful deductions to the tenant.
b. Upon the termination of the landlord’s interest in the dwelling unit and compliance with the provisions of this subsection, the landlord shall be relieved of any further liability with respect to the rental deposit.
6. Upon termination of the landlord’s interest in the dwelling unit, the landlord’s successor in interest shall have all the rights and obligations of the landlord with respect to the rental deposits, except that if the tenant does not object to the stated amount within twenty days after written notice to the tenant of the amount of rental deposit being transferred or assumed, the obligations of the landlord’s successor to return the deposit shall be limited to the amount contained in the notice. The notice shall contain a stamped envelope addressed to the landlord’s successor.
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