In Rhode Island, the collection and return of security deposits are primarily regulated under the RI Gen L § 34-18-19. These laws provide a set of rules that Rhode Island landlords and property managers have to follow to protect all parties.
Maximum Security Deposit Charge in Rhode Island
Rhode Island limits the maximum security deposit to one month’s rent.
Furniture Security Deposit Limit. Rhode Island rental units that are furnished may require an additional furniture security deposit of up to one month’s rent if the value of the furnishings exceed $5,000.
Additional Pet Deposits. Under Rhode Island’s law, the landlord may ask for an additional pet deposit. However, there is no limit for pet deposits except for those who have a service animal. 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 Rhode Island
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.
- Trash disposal.
- Cleaning costs.
- 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 Rhode Island
- “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 the terms outlined in the lease. The tenant must:
- Comply with all building and housing codes that affect health and safety.
- 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.
- 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 also has an obligation not to conduct themselves in a way that damages the property or leads to breaches of contract or law. The tenant may not:
- Negligently or deliberately destroy, damage, or remove parts of the premises.
- Unreasonably disturb the neighbor’s peaceful enjoyment of the premises.
- Use any part of the premises that would store or place any unlawful sale, use or keeping of a controlled substance which shall be deemed a common nuisance.
- Use any part of the premises or public property adjacent thereto for the sale, delivery manufacturing of a controlled substance or from possessing the controlled substance on the premises or any public property adjacent thereto with the intent to sell, deliver, or manufacture a controlled substance.
- Commit any crime of violence on the premises or on any public property adjacent to the premises. Crime of violence or committing a crime of violence includes the following actions: mayhem, kidnapping, arson, murder, manslaughter, rape, sexual assault, assault with a dangerous weapon, assault or battery involving grave bodily injury and a felony assault with the intent to commit any offense.
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.
Returning Security Deposits in Rhode Island
Time Frame: A Rhode Island landlord has 20 days to return any unused portion of the security deposit along with a written itemized list of damages deducted. This period begins on the date of termination presented in the lease agreement, during which written notice should be mailed to the tenant’s forwarding address.
Furniture deposits must also be returned, minus applicable cleaning or repair fees, within 20 days of lease termination through the same means as the security deposit.
Security Deposit Return in Regard to Fire or Casualty Damage: If the premises is damaged or destroyed by fire or casualty to an extent that enjoyment is substantially impaired, the landlord shall return the security deposit.
Failure to Return Security Deposit as Required: If the landlord refuses or fails to return the security deposit and the furniture security deposit (if applicable) within the 20-day limit, the tenant stands to recover the withheld funds and double the sum in damages, plus any legal fees associated with recovering the deposit in court. The tenant may sue the landlord for their security deposit in Small Claims Court up to $2,500.
Security Deposits and Tax Filing in Rhode Island
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:
- 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.
- 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 Rhode Island
Receipt Requirements: The landlord is not required to provide a receipt for the security deposit in Rhode Island.
Security Deposit Holdings in Rhode Island: Rhode Island laws do not require landlords to hold security deposits separate from other funds.
Security Deposit Interest in Rhode Island: Rhode Island 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 is required to assume responsibility for the security deposit funds and their return if they are in possession at the termination of tenancy.
For additional questions about security deposits in Rhode Island, please refer to the official state legislation, Rhode Island Landlord-Tenant Statutes.