Montana landlords avoid unnecessary disputes by understanding how the state’s security deposit laws work. Clear rules around deposit limits, proper storage, and lawful deductions help prevent confusion, missed deadlines, and conflicts over returns.
This guide walks through everything you need to know, including how much landlords can collect, how to store deposits, whether interest applies, what deductions are allowed, how and when to return funds, and how to handle disputes when they arise.
Statutes Regulating Montana Security Deposits
Montana’s security deposit rules appear in Title 70, Chapter 25 of the Montana Code Annotated, which outlines how landlords collect, hold, and return deposits for residential rentals.
Maximum Security Deposit Amounts Under Montana Law
Montana sets no limit on how much a landlord can collect for a security deposit. Property owners choose an amount they believe fits the rental, and this flexibility stays the same regardless of lease type, contract length, or other terms in a residential agreement.
Montana does not create exceptions to these rules, and no statewide limits apply to deposit amounts. Local jurisdictions in Montana also do not set separate caps, so property owners must follow the same statewide standard everywhere in the state.
Security Deposit Storage Regulations
Montana does not require landlords to use a specific account or follow dedicated procedures when holding security deposits. With no formal rules in place, property owners can choose how to store these funds, and the law does not require landlords to notify tenants where they’re holding the security deposits.
Security Deposit Interest in Montana
Montana does not require landlords to keep security deposits in interest-bearing accounts, and property owners also do not need to pay tenants interest on the funds held during the rental term.
Making Security Deposit Deductions
Security deposit deductions help landlords keep a rental property in good condition, since tenants sometimes leave damage beyond normal wear and tear. These funds give landlords a reliable way to complete repairs and return the unit to its previous condition, keeping it safe, functional, and ready for the next occupant.
When Landlords Can Deduct
Montana landlords may draw from a tenant’s security deposit for the following reasons:
- Repair damage exceeding normal wear and tear discovered after move-out
- Address cleaning needs when the unit no longer meets reasonable standards
- Replace items missing from the original move-in inventory checklist
- Cover unpaid rent that remains at the end of the rental term
- Apply funds toward other unpaid charges allowed under the rental agreement
When Landlords Can’t Deduct
Montana landlords may not draw from a tenant’s security deposit for the following reasons:
- Addressing deterioration that occurs through ordinary and expected use
- Repairing issues caused by a landlord’s failure to maintain essential services
- Completing upgrades or improvements that do more than restore earlier condition
- Charging for wear that naturally occurs during a tenant’s reasonable occupancy
- Charging for defects already documented before the tenant took possession
Necessary Documentation to Accompany Deductions
Montana requires landlords who withhold any portion of a security deposit to give tenants a written, itemized list of deductions. The law does not require landlords to attach receipts or invoices, though keeping those records will help support deductions if a dispute arises.
What to Do When Deductions Are Greater Than the Deposit
Damage or unpaid charges sometimes exceed the security deposit. When this happens, landlords can send the former tenant a written request for the remaining balance along with documentation of the additional costs. If the tenant refuses to pay, the landlord may pursue recovery through the Montana Justice Court, depending on the amount owed.
Returning Security Deposits to Tenants
Montana law sets clear rules for how landlords return any remaining portion of a tenant’s security deposit after applying all lawful deductions.
Required Timeline for Return
Montana landlords must return the deposit within 10 days when no deductions apply and when the landlord provided a written cleaning checklist at move-in. If deductions apply, landlords have 30 days to return the balance along with an itemized list. The timeline starts once the tenant vacates and returns possession of the unit to the landlord.
Method for Return
Landlords may return the deposit using any standard payment method, such as a check or another form agreed to in advance. When deductions apply, landlords must include a written itemized statement of all charges along with the remaining funds.
Penalties for Late Return
If a landlord in Montana returns the deposit late or improperly withholds funds, the tenant may recover the amount wrongfully withheld, plus an additional penalty equal to that amount. Landlords may also owe reasonable attorney fees if the matter proceeds to court.
Security Deposit Disputes
If a tenant disagrees with how a landlord handles a security deposit, they have every right to raise a dispute. Tenants often start by reviewing the itemized deductions, requesting written clarification, and negotiating with the landlord. If they can’t reach a common ground with the landlord directly, the tenant may seek mediation or bring the matter to court.
As a landlord, prepare for security deposit disputes by using move-in and move-out checklists, staying current with accounting and bookkeeping, and including clear terms in the lease agreement. Thorough documentation, strong familiarity with Montana law, clear communication, and consistent attention to required timelines also help reduce conflict.
Using Condition Reports to Document Damage
Landlords in Montana who manage security deposits should use detailed move-in and move-out condition reports to track a unit’s condition, document changes, and handle disagreements with less stress. Strong reporting habits also make day-to-day property management easier.
To simplify this process, use property management software to create digital reports with photos and videos directly from a smartphone. Clear documentation before move-in and after move-out will help support accurate, non-negotiable security deposit deductions.
Sign up for a free TurboTenant account to collect security deposits, create condition reports, and return funds to tenants with ease.
FAQs: Montana Security Deposit Law
Can a landlord deduct painting from a security deposit in Montana?
A Montana landlord may deduct painting costs only when a tenant leaves damage, markings, or alterations that require more than routine touch-ups. Normal wear does not qualify, but deductions apply when repainting restores the unit to its condition before the tenancy.
Are nail holes considered normal wear and tear in Montana?
Small nail holes usually count as normal wear and tear in Montana, so landlords generally cannot deduct for them. Larger holes, multiple holes, or damage caused by improper mounting may qualify as tenant-caused damage, which allows a landlord to withhold part of the deposit.
Does the landlord or tenant have to pay for carpet cleaning in Montana?
A Montana landlord may charge for carpet cleaning only when a tenant leaves the carpet in a condition beyond normal wear and tear. Standard cleaning needs fall under normal wear, but heavy stains, odors, or significant damage may justify a deduction from the security deposit.
What happens if a landlord doesn’t return a security deposit within 10 or 30 days in Montana?
If a Montana landlord misses the 10-day or 30-day deadline or improperly withholds funds, the tenant may recover the amount wrongfully withheld, plus an equal amount as a penalty. The landlord may also owe reasonable attorney fees if the dispute proceeds to court.
