In Utah, the collection and return of security deposits are primarily regulated under Utah Code § 57-17-5. These laws provide a set of rules that Utah landlords and property managers have to follow in order to protect all parties.
Maximum Security Deposit Charge in Utah
In Utah, there are no limits on how much a landlord may charge as a security deposit or pet fee.
Landlords generally charge between one and two months’ rent as a security deposit, with another month’s rent for a pet deposit. A security deposit may be refundable or non-refundable and must be stated in writing to the tenant when the deposit is taken.
Additional Pet Deposits. Under Utah’s law, the landlord may ask for an additional pet deposit. 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 Utah
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.
- Cleaning costs.
- Breaches of contract.
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 Utah
- “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 specific obligations. To comply with the obligations under the said rule, the tenant must:
- Comply with all rules of the board of health that affect physical health and safety.
- Comply with all rules and regulations of the rental agreement (e.g., smoking tobacco products on the premises).
- 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 by following the rental agreement and state laws.
- Leave the premises in the same condition it was in when it was handed to the tenant.
To comply with other obligations, the tenant must not:
- Deliberately or negligently destroy, damage, or remove parts of the premises.
- Unreasonably disturb the neighbor’s peaceful enjoyment of the premises.
- Unreasonably refuse entry or access to the landlord for the purpose of making repairs.
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 Utah
Time Frame: A Utah landlord should immediately return the deposit if no deductions are made or must provide notice of deductions being taken from the deposit. If deductions are taken, the landlord has any 30 days from lease termination to provide a written itemized receipt of deductions to the tenant’s last-known or forwarding address.
Failure to Return Security Deposit as Required: If the landlord refuses or fails to return the security deposit within the 30-day limit, the tenant must serve a specific notice to the landlord that demands the return of the funds. After doing so, they tenant may recover the full security deposit plus $100 civil penalty.
This notice should state the following information:
- The names of the parties on the rental agreement.
- The day the tenant vacated the rental unit.
- That the landlord agent has failed to comply with the requirements.
- The address where the agent may send the balance of the deposit and any prepaid rent, as well as the written itemized statement of deduction, if any (UT Code § 57-17-3 (3)(a)).
- Substantially in the format of the “TENANT’S NOTICE TO PROVIDE DEPOSIT DISPOSITION”:
TENANT’S NOTICE TO PROVIDE DEPOSIT DISPOSITION
TO: (insert owner or owner’s agent’s name)
RE: (insert address of rental property)
NOTICE IS HEREBY GIVEN THAT WITHIN FIVE (5) CALENDAR DAYS pursuant to Utah Code Sections 57-17-3 et seq., the owner or the owner’s agent must provide the tenant, at the address below, a refund of the balance of any security deposit, the balance of any prepaid rent, and a notice of any deductions from the security deposit or prepaid rent as allowed by law.
NOTICE IS FURTHER GIVEN that the tenant vacated the property on the _____ day of ___________, 20___.
NOTICE IS FURTHER GIVEN that failure to comply with this notice will require the owner to refund the entire security deposit, the full amount of any prepaid rent, and a penalty of $100. If the entire security deposit, the full amount of any prepaid rent, and the penalty of $100 is not tendered to the tenant, and the tenant is required to initiate litigation to enforce the provisions of the statute, the owner may be liable for the tenant’s court costs and attorney fees.
Mailing Address_____________________ City____________ State_____ Zip_______
This is a legal document. Please read and comply with the document’s terms.
Dated this ______ day of _____________, 20____.
Return of Service
On this _____ day of ____________, 20____, I swear and attest that I served this notice in compliance with Utah Code Section 57-17-3 by:
____ Delivering a copy to the owner or the owner’s agent personally at the address provided in the lease agreement;
____ Leaving a copy with a person of suitable age and discretion at the address provided in the lease agreement because the owner or the owner’s agent was absent from the address provided in the lease agreement;
____ Affixing a copy in a conspicuous place at the address provided in the lease agreement because a person of suitable age or discretion could not be found at the address provided in the lease agreement; or
____ Sending a copy through registered or certified mail to the owner or the owner’s agent at the address provided in the lease agreement.
The owner’s address to which the service was effected is:
Address________________________ City______________ State_____ Zip_______
_________________ (server’s signature)
Pursuant to Utah Code Title 78B, Chapter 18a, Uniform Unsworn Declarations Act, I declare under criminal penalty of the State of Utah that the foregoing is true and correct.
Executed this _____ day of _____________, 20____.
___________________ (server’s signature)
To serve this notice, the tenant should:
- Deliver a copy to the landlord or agent personally at the address provided in the lease agreement.
- If the landlord/agent is absent from the address provided in the lease agreement, a copy of the notice should be left with a person of suitable age and discretion at the address provided in the lease agreement.
- If a person of suitable age or discretion is not available at the address provided in the lease agreement, the tenant should affix a copy of the notice in a conspicuous place at the address provided in the lease agreement.
- Sending a copy through registered or certified mail to the landlord/agent at the address provided in the lease agreement.
The landlord must comply within five business days of which the notice is served to the tenant. Tenants may sue landlords in Utah’s Small Claims Court up to $10,000 in recovery.
Security Deposits and Tax Filing in Utah
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 Utah
Receipt Requirements: The landlord is not required to provide a receipt for the security deposit in Utah.
Security Deposit Holdings in Utah: Utah laws do not require landlords to hold security deposits separate from other funds.
Security Deposit Interest in Utah: Utah laws do not require landlords to provide interest on held security deposits.
Nonrefundable Deposits: If a written lease is being used for tenancy, any fees that are nonrefundable must be disclosed in the lease. Otherwise, they must be refundable.
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. The original landlord has two options:
- Transfer the security deposit (minus any deductions) to the new owner and notify the tenant of the transfer along with the name and address of where the deposit will be held; or
- Return the security deposit (minus any deductions) to the tenant and notify the new owner.
For additional questions about security deposits in Utah, please refer to the official state legislation, Utah Landlord-Tenant Statutes.