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It's important to understand Utah's security deposit laws, which regulate the return and collection of the tenant's deposit under Code 57-17-5.

These laws offer a set of rules for property managers and Utah Landlords to follow to protect everyone. Though not required, it's wise to put the security deposit information in the written lease agreement. Are you ready to find out more about the rules and ensure that you're doing things correctly? Let's learn more!

Maximum Deposit

Utah doesn't put any security deposit limits on what landlords can charge for a pet fee or security deposit. Generally, Utah landlords charge one to two months' rent as the security deposit and may withhold another month's rent for the pet deposit. The tenant's deposit could be nonrefundable or refundable, but this must be stated in writing when the deposit is given.

Under Utah laws, landlords can ask for a pet deposit on top of the security deposit. However, people with service animals cannot be charged that amount as it is seen as discrimination. In fact, the Federal Fair Housing Act requires that all housing facilities allow tenants with service animals to have an equal opportunity for using and enjoying the home.

Allowable Deductions

Landlords can use the tenant's security deposit to make deductions once the tenant vacates the premises. It can be used for:

  • Unpaid rent
  • Cleaning costs
  • Costs of damage caused by the tenant for failure to comply with their obligations
  • Breaches of contract of the lease agreement

The tenant's security deposit could be used to cover the last month's rent if and when both parties have agreed, and it's in the written lease agreement. If there's no mention of this in the lease agreement, the security deposit is handled separately from the outstanding rent balance.

Normal Wear & Tear

Normal wear and tear focuses on issues that happen while using the rental unit for its intended purpose as long as it wasn't careless, negligent, accidental, or abusive toward the premises. Under the Utah's security deposit law, this applies to guests, other household members, and more.

Wear and tear can include various minor issues, such as loose door handles, gently worn carpets, stained bath fixtures, faded flooring and wall paint, and dirty grout that happens naturally while the tenant lives on the property.

On the other hand, damage is considered destruction of the landlord's rental unit that occurred from negligence or abuse by the tenant during tenancy, which affects the usefulness, normal function, and value of the premises. Examples can include pet damage like ripped or stained carpet, holes in the walls, broken tiles, broken windows, and more.

Law for Returns

The Utah landlord must return the deposit immediately if they don't make deductions or provide written notice of the deductions taken from the tenant's deposit. When deductions are taken, landlords have 30 days from the termination of the lease to give a written and itemized receipt, sending it to the last-known address or forwarding address provided by the tenant.

Utah laws are strict on returning security deposits. If the landlord doesn't return the security deposit within that 30-day limit, the tenant can serve notice to the landlord demanding the funds. After that, the tenant can receive their full deposit and $100 in civil penalties.

Landlords should be aware of what the notice contains:

  • Names of the parties found on the rental agreement
  • Date the tenant vacated the unit
  • Statement indicating the landlord or the owner's agent didn't comply with requirements
  • Forwarding address where the agent can send the deposit or prepaid rent amounts and an itemized statement of the deductions

Traditionally, tenants must:

  • Deliver a copy of the letter to the landlord personally to the address provided in the lease
  • If there's no mention of the address provided in the lease, a copy of it must be given to someone of suitable age at the address included in the lease
  • If no one of suitable age is available at that address, the tenant will hang a copy of the notice in any conspicuous place at that address
  • Send a copy through registered or certified mail

After this all happens, the landlord has five business days to comply and return the tenant's security deposit. Otherwise, tenants have the right to sue in small claims court and could win $10,000 in recovery damages.

Tax Filings

Landlords might have to consider the tenant's security deposit as taxable income in some cases. Traditionally, they aren't automatically income when they're collected initially. They become taxable income once the landlord has no obligation to return them. Then, they may even be considered write-offs for your tax purposes.

The IRS has rules in place to determine whether a security deposit must be reported as income and when that happens. They include:

  • When the security deposit is forfeited because of a lease breach or is used for unpaid rent, the amount kept is declared as income for the year it was applied.
  • The security deposit can be used to cover chargeable expenses, and the landlord then includes that part as income when they add the repair costs as expenses. However, if landlords don't normally do this, they don't have to claim the deposit as taxable income.
  • If there's an agreement in place to use the entire security deposit or part of it for the final month's rent, the landlord must include it as taxable income when it's received.

Additional Regulations

Here are a few additional rules to keep in mind:

  • Receipt Requirements - Landlords in Utah don't have to provide a written security deposit receipt to the tenant.
  • Security Deposit Interest - Utah laws don't require landlords to give interest to the tenant on the security deposits.
  • Security Deposit Holdings - Utah laws don't require landlords to hold the security deposit separate from their other funds.
  • Nonrefundable Security Deposits - If there's a written lease for tenancy, nonrefundable fees must be disclosed, or else they become refundable.
  • New Owner Responsibility - The original landlord can sell or transfer the ownership of the rental property, but they are held responsible for the deposit funds. They may transfer the deposit (minus deductions) to the new owner, notifying the tenant about this in writing, or return the deposit (minus deductions) to the tenant, notifying the owner.

Conclusion

It's often challenging to understand the landlord-tenant rights in Utah. The state has many rules in place governing eviction, what to include in the lease agreement, and more. As the landlord, you're responsible for staying updated on all the rules, and this includes any Utah security deposit laws.

You learned about what to charge as a tenant's security deposit, the allowable deductions available to you, and when to include an additional pet deposit. If you still have questions about security deposit funds and rules, it might be wise to seek professional legal advice. This might incur attorney fees, but it's safer than doing things incorrectly.

Landlords who don't follow the security deposit laws may be liable for court costs and other fines associated with failure to return deposits and all the rest.

FAQs

How Much Can Landlords Charge for Security Deposits?

Landlords in Utah can charge any amount they wish as a pet or security deposit. However, a service animal cannot incur an extra fee.

Does a Landlord Have to Provide a Move-in Checklist?

Utah landlords don't have to create a move-in checklist or condition statement before tenancy begins. However, it's wise to ensure all parties are on the same page and understand how deductions are made when the lease ends.

Can Landlords Use That Security Deposit for the Last Month's Rent?

The security deposit is not used for the last month's rent unless both parties agree to it, and it's in the lease agreement.

What Can Landlords Deduct from the Utah Security Deposit?

The Utah landlord can legally deduct cleaning costs, repairs for any non-wear damages to the property, monetary damage caused by the tenant breaching the lease, unpaid rent, and other charges outlined within the lease so that the premises can be restored to its original condition.

Can Landlords Charge Cleaning Costs/Fees?

Yes, landlords in Utah can charge a cleaning fee. However, it must be included in the rental agreement and signed by the tenant. The exception is if cleaning is necessary to return the rental back to its original condition (minus any expected wear and tear).

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Resources

  1. https://envypropertymanagement.com/utah-security-deposit-law/
  2. https://keyrentersaltlake.com/utah-security-deposit-refund/
  3. https://www.apmutah.com/utah-security-deposit-law
  4. https://getjerry.com/renters-insurance/utah-security-deposit-laws
David Bitton

David is the co-founder & CMO of DoorLoop, a best-selling author, legal CLE speaker, and real estate investor. When he's not hanging with his three children, he's writing articles here!