Security Deposits in Utah

Utah landlords should be aware of the state’s landlord-tenant laws, and the rules that govern security deposit is one of them. Landlords should adhere to these rules and protect their interest in the even of a security deposit dispute with a tenant. The landlord-tenant relationship requires that both landlord and tenant have an understanding of how the state’s security deposit law applies to them and their relationship.

Quick Facts for Utah

  • Maximum Amount: No limit
  • Duration for Return: 30 days after end of lease
  • Other Return Requirements: Itemized list of any damages
  • Penalty for Late Returns: With proper notice, tenant may recover the full deposit, a civil penalty of $100, and any legal fees from landlord

The Purpose of a Security Deposit

Security deposits serve as a safety net for landlords should they suffer financial losses caused by the tenant doing damage to the rental property, or a breach of the lease agreement, or unpaid rent.

Security Deposit Maximum in Utah

The state of Utah has no established maximum amount that a landlord can charge a tenant for a security deposit. 

Non-refundable Deposit

If there is a written agreement, and if any part of the deposit is non-refundable, it must be stated in writing to the tenant at the time the deposit is taken by landlord/ agent (UT Code § 57-17-2).

Returning the Security Deposit

Utah landlords/agents are required to either return a tenant’s security deposits at the termination of the tenancy or provide the tenant with a written notice that explains the reason any refundable security deposit is being retained (UT Code § 57-17-1).

Timeframe: A landlord/agent has no later than 30 days after the day on which a tenant vacates and returns possession of a rental unit, to deliver to the tenant at his/her last known address, the balance of any deposit; the balance of any prepaid rent; and if any deductions are made from the deposit or prepaid rent, a written notice that itemizes and explains the reason for each deduction (UT Code § 57-17-3 (2)).

Allowable Deductions

When the tenancy is terminated, property or money held as a deposit may be applied to the following deductions (UT Code § 57-17-3 (1)):

  • Payment of rent
  • Damages to the premises beyond reasonable wear and tear
  • Cost of cleaning the unit
  • Other costs and fees provided for in the contract

Failure to Comply with Return Requirements 

If a landlord/agent fails to comply with the security deposit return requirements, the tenant may serve him/her a notice that:

1. States: 

  • The names of the parties to the rental agreement
  • The day on which the tenant vacated the rental unit
  • That the landlord agent has failed to comply with the requirements 
  • The address where the lord/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)). 

2. Substantially in the format of the  “TENANT’S NOTICE TO PROVIDE DEPOSIT DISPOSITION” form example (UT Code § 57-17-3 (3)(b)).

Notice Delivery: The notice of failure to comply with return requirements should be served by (UT Code § 57-17-3 (4)(a)(b)):

(i) Delivering a copy to the landlord/ agent personally at the address provided in the lease agreement;

(ii) 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; or

(iii) 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; or

(b) Sending a copy through registered or certified mail to the landlord/agent at the address provided in the lease agreement.

The landlord/agent must comply with the “Tenant’s Notice to Provide Deposit Disposition” within five business days after the day the notice is served (UT Code § 57-17-3 (5)).

Failure to Return Deposit or Prepaid Rent or to Give Required Notice

If a landlord/agent fails to comply with the requirements for returning a tenant’s security deposit, then tenant may recover from the landlord/agent:

  • The full deposit, if he/she failed to timely return the balance of the deposit, 
  • The full amount of the prepaid rent, if he/she failed to timely return the balance of the renter’s prepaid rent
  • A civil penalty of $100 
  • Court costs and attorney fees if the landlord/agent is found by the courts to have acted in bad faith (UT Code § 57-17-5(1)(a)(b)); UT Code § 57-17-5(2)).

If a tenant doesn’t provide a notice to the landlord/agent, he/she cannot recover damages.

Last Month’s Rent

A security deposit is not intended to be used to cover a tenant’s last month’s rent. However, a landlord and tenant can agree in writing for the security deposit to be used as last month’s rent.

How to Get a Full Refund of Security Deposit

At the end of the tenancy, a full security deposit can be returned to the tenant if there is no damage to the rental property, rent is paid in full, all charges in the rental agreement are covered.

Security Deposits and Tax Filing

What happens to the deposit at the end of the tenancy determines how it is treated for tax purposes.

 

  • Accounting for Security Deposits: Security deposits are treated as either assets or liabilities when filing taxes. Tenants shouldn’t deduct security deposits as expenses and landlords shouldn’t declare them as income when in escrow intended to be returned to the tenant.
  • Security Deposit Write-off: If a landlord withholds part or all of the security deposit for losses, that amount should be included as income when filing taxes. Forfeited deposits should be declared as income.

“Normal Wear and Tear” vs. Damage

  • “Normal wear and tear” is deterioration that occurs as a result of everyday use of the rental unit, and without negligence, carelessness, accident, or misuse or abuse by the tenant.
  • “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. 

Holder of Landlord’s/Agent’s Interest

Whoever holds the landlord’s/agent’s interest in the premises at the time of termination of the tenancy is bound by the provisions of Utah Code Annotated §§ 57-17-1 to 57-17-5 (UT Code § 57-17-4).

Utah Security Deposit Law

Utah security deposit statutes can be found in Utah Code Annotated §§ 57-17-1 to 57-17-5.

Tips for Utah Landlords on the Right Practices for Security Deposits

  • Charge tenants a security deposit amount that is appropriate in the absence of a statutory limit
  • Provide tenants with an itemized list of deductions and the cost of each
  • Return security deposits within 30 days after the day on which a tenant vacates and returns possession of a rental unit
  • Withhold security deposits for the payment of rent, damages to the premises beyond reasonable wear and tear, the cost of cleaning the unit and other costs and fees provided for in the contract
  • Seek damages in legal proceedings if the security deposit if a tenant breaches rental agreement and you need to recover damages

Landlords and tenants should know how Utah’s security deposit law governs the landlord-tenant relationship. Landlords have a responsibility to remain in compliance with the state’s security deposit law. Tenants should adhere to their lease obligations over the course of their tenancy.

Read About Security Deposits in Other States

Arizona

Colorado

Delaware

Georgia

Hawaii

Idaho