In Oklahoma, the collection and return of security deposits are regulated under the 41 OK Stat § 41-115 These laws provide a set of rules that Oklahoma landlords and property managers have to follow to protect all parties.
Maximum Security Deposit Charge in Oklahoma
In Oklahoma, there are no limits on how much a landlord may charge as a security deposit (or pet fee) as long as it is stated in the lease agreement. Landlords generally charge between one and two months’ rent as a security deposit.
Additional Pet Deposits. Under Oklahoma’s law, the landlord may ask for an additional pet deposit, generally around an additional one month’s rent. However, people with disabilities who use service animals are entitled to full and equal access to housing. Thus, the tenant may not be discriminated against and the landlord may not require the tenant to pay extra to have a service animal. If the service animal causes damage to the rental unit, the tenant is liable to pay for any damages.
The Federal Fair Housing Act requires housing facilities to allow tenants who use service dogs and emotional support animals to have an equal opportunity to use and enjoy their home.
Allowable Deductions on Security Deposits in Oklahoma
The landlord may use the security deposit to make deductions only after the tenant has vacated the premises. The security deposit should be used to cover:
- Unpaid rent.
- Costs of damage caused by the tenant’s failure to comply with obligations as a tenant but not those considered to be standard wear and tear.
- Other charges outlined in the lease.
Can the deposit be used by the tenant as last month’s rent?
The deposit may be used as the last month’s rent only if both parties agree in the lease agreement. Otherwise, the security deposit should be handled separately from any rent balance left outstanding.
“Normal Wear and Tear” vs. Damage in Oklahoma
- “Normal Wear and Tear” is defined as deterioration that occurs as a result of use for which the rental unit is intended and without negligence, carelessness, accident, or misuse or abuse of the premises or contents by the tenant or members of his household, or their invitees or guests. It can include minor issues, such as gently worn carpets, loose door handles, fading wall paint and flooring, stained bath fixtures, lightly scratched glass and dirty grout that occur naturally as a result of the tenant using the property as it’s designed to be used.
- “Damage” refers to destruction to the rental unit that occurs because of abuse or negligence by a tenant during the course of the tenancy and can affect usefulness, value, normal function of the rental unit. Pet damage (heavily stained and ripped carpet), broken tiles, hole in the wall, broken windows and missing fixtures are all examples of damage.
Check out our article on wear and tear vs. damage to get a better idea of the difference.
The landlord can only charge the cost of repairs if the damage was caused by the failure of the tenant to comply with a tenant’s obligation to mitigate damages and adhere to the lease agreement.
To comply with these obligations, the tenant must:
- Keep the premises, including all plumbing fixtures, clean and safe.
- Dispose of garbage and other waste in a clean and safe manner.
- Use all facilities (e.g., electrical, plumbing, heating, etc.) and appliances reasonably and in a safe and nondestructive manner.
- Comply with the maximum number of persons allowed to occupy the premises.
- Leave the premises in the same condition it was in when it was handed to the tenant.
The tenant must also not:
- Deliberately or negligently destroy, damage, or remove parts of the premises.
- Unreasonably disturb the neighbor’s peaceful enjoyment of the premises.
- Engage in illegal activities involving prostitution, gambling, use of alcohol or controlled or prohibited substances, and other similar or illegal activities, or in activities promoting the same within the premises. Along with criminal activities that are threatening to the health and safety of other tenants.
If the damage to the premises was caused by the tenant’s failure to comply with any of the above, then the landlord may take the cost of repairing it from the security deposit. A landlord may adopt rules or regulations. The rules and regulations are enforceable, but not limited, to the following situations: if it’s purpose is to promote the safety, peace, convenience and welfare of the tenants, protect the property, make a fair distribution of the use of facilities, applies to all tenants.
Returning Security Deposits in Oklahoma
Time Frame: An Oklahoma landlord has 45 days from lease termination and the tenant’s written demand to return any unused portion of the security deposit along with a written itemized list of damages deducted.
If the tenant does not claim the security deposit and interest funds within six months, they may be retained by the landlord.
Failure to Return Security Deposit as Required: If the landlord refuses or fails to return the security deposit within the 45-day limit, the tenant stands to recover up to the full security deposit, plus damages awarded by the court and any legal fees associated with recovering the deposit in court. The tenant may sue the landlord in Oklahoma’s Small Claims Court in the maximum amount of $7,500.
Security Deposits and Tax Filing in Oklahoma
Whether a security deposit will be treated as taxable or not depends on if the deposit is used or returned.
Taxable Income: Security deposits are not automatically considered income upon collection at the beginning of tenancy. They only become taxable income when the landlord no longer has any obligation to refund them (such as for settling damages incurred). At this point they may also qualify as a write-off for tax purposes as well.
Reporting Security Deposit as Income: Whether or not security deposit should be reported as income and when to do so will depend on what it is being applied to or used as. Below are three simple rules the IRS has suggested to follow:
- If the deposit is forfeited due to a breach of the lease or applied to unpaid rent, then the amount kept should be declared as income in the year it was forfeited or applied.
- If the security deposit is used to cover expenses that are chargeable to it, then the landlord should only include the part of the deposit used as income if the landlord includes the cost of repairs as expenses. If the landlord doesn’t include them as expenses as a matter of practice, then there’s no need to include the part of the deposit kept to cover them as income.
- If there is an agreement between the parties to use the deposit or part of it as the final month’s rent, then the landlord should include it as income when the same is received.
Additional Rules & Regulations in Oklahoma
Receipt Requirements: The landlord is not required to provide a receipt for the security deposit in Oklahoma.
Security Deposit Holdings in Oklahoma: A security deposit required by a landlord must be kept in an escrow account for the tenant. The account shall be maintained in the State of Oklahoma with a federally, insured financial institution. Any unlawful use of the security deposit shall be punishable by going to county jail not to exceed six months and charged with a fine in an amount not to exceed twice the amount unlawfully used from the escrow account.
Security Deposit Interest in Oklahoma: Oklahoma laws do not require landlords to provide interest on held security deposits.
New Property Owner’s Responsibility: If the original landlord decides to sell or transfer ownership of the rental property, he or she must either:
- Transfer the deposit to the successor and notify the tenant in writing of their contact information; or
- Return the deposit to the tenant.
If the new buyer transfers the deposit (as mentioned in the first option), a receipt must be given to the tenant and therefore the new buyer will be liable for all obligations and rights as the new landlord holding the deposit.
For additional questions about security deposits in Oklahoma, please refer to the official state legislation, Oklahoma Landlord-Tenant Statutes.