KY Rev. Stat. § 383.580 regulates all the laws and regulations regarding security deposits in Kentucky. This regulation together with Kentucky landlord-tenant laws has been established to protect both Kentucky landlords and tenants.
If it is specified in the lease agreement, there are no restrictions on how much a landlord may charge as a security deposit (or pet fee) in Kentucky. A security deposit often ranges from one to two months' rent, with an additional month's rent for a pet deposit.
Landlords in Kentucky are expected to adhere to the state's security deposit laws when collecting and maintaining the deposit.
Security Deposit Holdings in Kentucky
Under Kentucky landlord-tenant laws, security deposits cannot be mixed with other funds and must be kept in separate accounts with any Kentucky bank, US government agency, or lending institution. Tenants must be made aware of the name, location, and account number of the separate account. The landlord will not be permitted to keep any money from the security deposit if it is not put in a separate account.
Under Kentucky security deposit law, the tenant must receive a receipt for the security deposit that specifies the account number and the location of the security deposit's holdings.
Security Deposit Interest
Kentucky landlord-tenant law does not require landlords to give tenants the interest held on security deposits.
According to Kentucky law, any lease that includes a security deposit must contain a move-in checklist that describes the property's current state and provides an estimate of the cost to fix any damages. Both parties must sign this form, whether they agree or disagree with the damages.
This will be used to ascertain whether a deduction is legitimate at the lease's conclusion. The lessee must express in writing the points on the list with which they disagree if they refuse to sign the contract.
Furthermore, the Kentucky landlord loses the right to deduct certain amounts at the conclusion of the lease if the move-in checklist is not completed before receiving the security deposit. To enforce the deductions, the landlord must itemize each deduction made as part of the move-out checklist.
Kentucky landlords may make the necessary deductions once the tenant vacates the rental property. Allowable deductions in terms of Kentucky landlord-tenant laws include:
- Reasons listed in the rental agreement.
- Unpaid rent.
- Cost of damage as a result of the lessee's failure to comply with his/her obligations, excluding normal wear and tear.
Failure to Return the Security Deposit
If the Kentucky landlord fails to refund the security deposit or does not do so within 30 days, the tenant is entitled to reimbursement for any money that was improperly held onto, as well as any costs incurred in filing a lawsuit to reclaim the deposit.
In Kentucky, landlords must give tenants a 30-day notice of any deductions made and the remaining amount of their security deposit so it can be returned. The landlord may withdraw the deposit from the account and use it to cover the outstanding rent due in 30 days if the lessee vacates the property without paying the previous month's rent and without demanding a return of the security deposit.
The landlord must issue a notification to the tenant's last-known address if they left the property after paying the rent and any refundable security deposit. Furthermore, the landlord may withdraw the security deposit from the account and keep the remaining money if the tenant does not acknowledge the notice within 60 days of receiving it.
Kentucky tenants also have certain obligations that they need to comply with. Failure to adhere to these obligations could result in damages caused by negligence. A few of the rules tenants need to comply with include:
- Keep the property and all plumbing fixtures in a good condition.
- Comply with all health and safety regulations in the building and housing codes.
- Use all appliances and facilities in a reasonable manner.
- Dispose of all waste on the property in a safe and clean manner.
A landlord may occasionally modify or enact new regulations. Changes to the rules are allowable by the landlord as long as they are made to ensure the safety and well-being of the lessee or to safeguard the property. The lessee must give written approval to any additional rules that are implemented after the lease agreement has been signed. Furthermore, the tenant has a duty to keep the property in the same condition as when it was provided.
The tenant is not allowed to:
- Unreasonable affect the neighbor's peace and quietness.
- Negligently or deliberately remove, damage, or destroy any part of the property.
However, if the tenant fails to comply with any of the above-mentioned factors, the landlord may deduct the cost of repairs from the security deposit. If there are any disputes or disagreements between the landlord and tenant, the matter may be taken to the small claims court.
According to Kentucky landlord-tenant laws, the security deposit money and the return are the original landlord's duty if they decide to sell or transfer ownership of the rental unit. Until a new lease is signed, the new landlord cannot modify the security deposit or other aspects of the lease.
Under Kentucky landlord-tenant law, security deposits only constitute income when the tenant no longer has a right to a refund of the deposit. Therefore, landlords must declare income if:
- The Kentucky landlord and tenant have a valid agreement to use the deposit as the last month's rent.
- The tenant breached any of the provisions in the lease agreement and forfeited their right to a refund.
- The expenses used to cover the cost of repairs because of damages caused by the tenant should be deducted from the full sum of the deposit. However, the landlord does not need to declare the portion of the funds held to cover them as income if the landlord does not generally consider them as expenses.
If Kentucky tenants damage your property or withhold rent payments for an unlawful reason, landlords may deduct the amounts from the deposit. Kentucky security deposit laws, Kentucky landlord-tenant laws, and eviction laws are all in place to ensure that both landlords and tenants are protected under the legal system. Having a clear understanding of the applicable laws in Kentucky helps you to understand landlord responsibilities and tenant obligations, which helps all parties build a positive landlord-tenant relationship.
Can You Use the Security Deposit as the Last Month's Rent in Kentucky?
Only if both parties agree on the rental agreement or if the lessee does not request the return of their security deposit while the balance is due after the lease expires may the deposit be used as the last month's rent. However, it is generally used if the tenant fails to pay rent.
Are Security Deposits Taxable in Kentucky?
In Kentucky, security deposits are not taxed unless they are used to pay rent, forfeited, or applied to costs permitted by the lease, at which point they become the landlord's property.
Is a Move-in Checklist Necessary in Kentucky?
Yes, a move-in inspection is necessary for Kentucky to produce a condition statement at the start of the tenancy that should contain an estimate of the cost of repairs. At the conclusion of the lease term, deductions for damage will be calculated using this checklist. The landlord loses the ability to deduct payments if the inspection is not done.
Can a Landlord Charge a Cleaning Fee in Kentucky?
If the tenant consents to them in the rental agreement or if the cleaning is necessary to restore the apartment to its original condition after normal wear and tear, a landlord may charge a cleaning fee in Kentucky.