Iowa’s security deposit laws give landlords clear guidance to avoid disagreements and steer clear of preventable disputes over allowable deductions, delays in returning deposits, or confusion about notice and documentation requirements.
In this guide, you’ll learn everything you need to know regarding these regulations, including maximum amounts landlords can request, how to store deposits, whether interest applies, legal reasons to deduct, returning deposits, handling disputes, and more.
Statutes Regulating Iowa Security Deposits
Iowa’s security deposit laws are outlined in Section 562A.12 of the Iowa Code. These rules guide how landlords collect, store, and return deposits, outline when deductions make sense, and set the timelines that help everyone stay on track.
Maximum Security Deposit Amounts Under Iowa Law
Iowa law allows landlords to collect up to 2 months of rent as a security deposit. This limit holds regardless of the lease type or length. Iowa keeps this 2-month cap the same across short-term rentals, long-term contracts, furnished spaces, and other common arrangements.
Security Deposit Storage Regulations
Iowa requires landlords to keep security deposits in a separate trust account at an insured bank, credit union, or trust company located in the state. These funds must stay separate from personal funds, but Iowa does not require landlords to provide receipts or notify tenants about the account used.
For example, a landlord cannot place a tenant’s security deposit in an account that mixes personal or operating funds with money held for tenants.
Security Deposit Interest in Iowa
Iowa law does not require landlords to hold security deposits in interest-bearing accounts or pay tenants interest for deposits held under five years. Landlords may keep deposits in non-interest-bearing accounts if they choose. However, if a security deposit is held in an interest-bearing account and the tenancy lasts more than 5 years, the landlord must pay the accrued interest to the tenant.
Making Security Deposit Deductions
Security deposit deductions help landlords protect the long-term interests of a rental. Tenants sometimes default on rent payments or leave damage beyond normal wear and tear, and landlords need access to funds that help cover those losses and restore the property..
When Landlords Can Deduct
Iowa landlords may use a tenant’s security deposit for the following reasons:
- Repairs needed for damage beyond normal wear and tear
- Unpaid rent that remains owed at the end of the lease
- Unpaid utility charges the tenant leaves behind at move-out
- Cleaning costs required to return the unit to a clean condition
- Costs to replace or fix items that the tenant damaged or removed
When Landlords Can’t Deduct
Iowa landlords may not use a tenant’s security deposit for the following reasons:
- Routine cleaning that aligns with normal turnover between tenants
- Minor cosmetic marks that appear through everyday use
- Upgrades or renovations that do not relate to tenant-caused damage
- Expenses tied to regular upkeep that a landlord must complete anyway
- Costs that result from landlord negligence or delayed maintenance
Necessary Documentation to Accompany Deductions
Iowa law requires landlords to give tenants a written, itemized statement listing each deduction taken from the security deposit and explaining why the charge applies. Iowa does not require landlords to include receipts, invoices, or other backup materials beyond the itemized summary.
What to Do When Deductions are Greater Than the Deposit
Sometimes tenants leave damage or unpaid charges that exceed the security deposit. When that happens, Iowa landlords should request the remaining balance directly from the former tenant. Iowa does not set a specific deadline for this request, so landlords often send a written demand soon after they identify the additional amounts owed.
Landlords who cannot recover the remaining balance can send the debt to a collections agency or file a claim in the relevant Iowa small claims court.
Returning Security Deposits to Tenants
Iowa law outlines how landlords must return any remaining portion of a tenant’s security deposit after making eligible deductions, creating a cut-and-dry process that encourages fair outcomes for both sides.
Required Timeline for Return
Under Iowa law, landlords must return the remaining security deposit within 30 days after the tenancy ends and after receiving the tenant’s forwarding address. The 30-day period begins only once a valid forwarding address is provided, and landlords must include the refund along with a written, itemized statement of deductions.
Method for Return
Iowa landlords may return the deposit by check, electronic payment, or another reliable method that ensures the tenant receives the funds. The landlord must include a written, itemized list of deductions with the returned balance so tenants can see how the landlord calculated the final amount.
Penalties for Late Return
If a landlord fails to return the deposit or provide the itemized statement within 30 days, they lose the right to keep any portion of the deposit. Courts may also award up to 2 times the amount wrongfully withheld when a landlord acts in bad faith.
Security Deposit Disputes
Tenants who disagree with how a landlord handles their security deposit hold the right to raise a dispute. They often begin for contacting the landlord directly, asking clarification in writing, reviewing the itemized deductions, or challenging specific charges. If the issue persists, they may turn to mediation or small-claims court to pursue a final decision.
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. Strong documentation, ongoing familiarity with Iowa laws, and careful attention to required timelines will help you keep your interests front and center.
Using Condition Reports to Document Damage
Security deposits in Iowa rely on accurate documentation, which makes detailed move-in and move-out condition reports essential for every tenancy. Digital condition reports help landlords track a unit’s condition, prevent disagreements, and simplify daily management by creating reliable records both sides can reference.
Modern-day landlords use property management software to create digital reports with photos and videos directly from a smartphone. Strong documentation before move-in and after move-out makes security deposit deductions far less negotiable when disputes arrive.
Sign up for a free TurboTenant account to build organized, shareable records that support fair and straightforward security deposit deductions.
FAQs: Iowa Security Deposit Law
Can a landlord deduct painting from a security deposit in Iowa?
Yes, Iowa landlords may deduct painting costs when a tenant leaves behind damage beyond normal wear and tear. Light scuffs or minor fading usually fall under regular use, but significant marks, discoloration, or unauthorized colors can justify a deduction.
Are nail holes considered normal wear and tear in Iowa?
Yes, small nail holes typically count as normal wear and tear in Iowa. Landlords usually cannot deduct for minor wall marks that appear through everyday living. Larger holes, wall anchors, or damage from heavy or excessive hanging may allow for a deduction when the tenant creates avoidable damage.
Does the landlord or tenant have to pay for carpet cleaning in Iowa?
Routine carpet cleaning in Iowa usually falls on the landlord. However, if a tenant leaves stains, odors, or heavy dirt beyond normal wear and tear, the landlord may charge the tenant for the portion of the cleaning needed to return the carpet to a clean condition.
What happens if a landlord doesn’t return a security deposit within 30 days in Iowa?
If a landlord misses Iowa’s 30-day deadline to return the deposit and provide the itemized statement, the landlord loses the right to withhold any part of the deposit. Courts may also award up to 2 times the amount wrongfully withheld when a landlord acts in bad faith.
