Security Deposits in Residential Tenancies

By Kyle Cirac

Summer is approaching quickly, which means the end of the school year for college students, and the end of lease terms for several of these students.  When a residential tenant vacates a rental property, they often want to claim a full refund of their security deposit as soon as possible.  In Nevada, landlords have certain obligations they must abide by regarding security deposits to remain in compliance with state law.  This article discusses residential leases under Chapter 118A of the Nevada Revised Statutes.  For information on security deposits in mobile home parks and commercial leases, refer to Chapters 118B and 118C, respectively.

A security is defined as any payment, deposit, fee or charge that is to be used for; (1) remedying any default of the tenant in the payment of rent; (2) repairing damages to the premises (other than normal wear caused by the tenant); or (3) cleaning the dwelling (NRS 118A.240(1)).  The rental agreement must contain provisions relating to any deposits which are required and the conditions for their refund.  A rental agreement may not characterize any security as nonrefundable, with the exception of a provision for a nonrefundable charge for cleaning in a reasonable amount (NRS 118.242(8)).

When landlords require a security deposit, Nevada law provides that a landlord may not demand or receive security, including the last month’s rent, in a total amount or value exceeding three (3) months’ rent (NRS 118A.242(1)).  For example, if the monthly rent is $500.00, the amount of the security may not exceed $1,500.00.  However, landlords are not required to charge the full amount.  To the contrary, many landlords are motivated to keep deposits at a reasonable level due to the competitive rental market and the inability of potential tenants to pay a large deposit.

Sometimes, a tenant will inform the landlord that they are planning to vacate the property and want to apply the security deposit toward the last month’s rent.  The landlord has no obligation to apply the deposit to the payment of the last month’s rent while the tenant is still living in the property.  However, it is still recommended to include a provision in the rental agreement that the tenant is not entitled to have the deposit allocated to payment of the last month’s rent.

When the tenancy is terminated by either party for any reason, the landlord may claim out of the deposit only such amounts as are reasonably necessary to remedy any default of the tenant in the payment of rent, to repair damages to the premises caused by the tenant other than normal wear, and to pay the reasonable costs of cleaning the premises (NRS 118A.242(4)).  Normal wear is defined as that deterioration which occurs without negligence, carelessness or abuse of the premises by the tenant, a member of tenant’s household, or other person on the premises with the tenant’s consent (NRS 118A.110).

The landlord is required to provide the tenant with an itemized written accounting of the disposition of the deposit and to return any remaining portion of the deposit no later than 30 days after termination of the tenancy (NRS 118A.242(4)).  Landlords should check the provisions of their rental agreements to ensure that they are not contractually obligated to account for or refund the deposit within a shorter period of time than that required by state law.  The landlord must deliver the accounting and any refund by handing it to the tenant personally at the place where rent is paid, or by mailing it to the tenant at the tenant’s present address, or if that address is unknown, at the tenant’s last known address.  Landlords should attempt to obtain a tenant’s forwarding address prior to the termination of the tenancy for the purpose of mailing the accounting and any refund of the deposit.

The itemized written accounting should provide adequate information so that the tenant will understand the reason for any deductions.  A thorough inspection should be performed and photographs of the property to record its condition should be taken at the time the tenant vacates.  The landlord should obtain written estimates of any repair work that needs to be completed and keep receipts for any supplies or materials purchased for cleaning or repairs.  In addition, the cost of any new improvements should be adjusted to account for depreciation.  For example, if the landlord replaces carpet which was 5 years old at the time the tenant moved in, the cost of the new carpet should be adjusted to cover the remaining life expectancy of the carpet replaced.

If you have other questions relating to security deposits, contact a lawyer to discuss your rights and obligations.

            * The foregoing information is of a general nature.  Landlords and tenants should contact their legal counsel with questions for advice concerning specific situations.