Security deposits in Alabama are regulated by the Alabama Uniform Residential Landlord and Tenant Act, Title 35, Chapter 9A. Certain municipalities may have local laws that supplement state regulations. To ensure full compliance, verify the regulations applicable in your area.

Maximum Security Deposit

Security deposits are generally limited to one month’s rent. However, additional deposits may be required for pets, changes to the premises, or increased liability risks to the landlord/property manager or premises.

Holding & Interest Requirements

Holding Requirements: Alabama state law does not currently specify where landlords/property managers must hold security deposits.

Interest on Deposits: Alabama state law does not currently require landlords/property managers to pay tenants interest on security deposits.

Information Provided to Tenant: There is currently no specific requirement for landlords/property managers to provide tenants with information about where the security deposit is held.

Deposit Refunds

Timeline: Security deposits must be returned within 60 days of the tenant vacating the property.

Deductions: Landlords/property managers may deduct the following from a security deposit:

• Unpaid rent
• Damages caused by the tenant’s noncompliance with Section 35-9A-301, which states that tenants shall: 
  
  • Comply with all building & housing code obligations materially affecting health and safety.
  • Keep the occupied premises clean and safe.
  • Dispose of waste in a clean and safe manner.
  • Keep all plumbing fixtures as clear as possible.
  • Use all electrical, plumbing, sanitary, heating, ventilating, air-conditioning, and other facilities and appliances (including elevators) reasonably.
  • Not deliberately or negligently destroy, deface, damage, impair, or remove any part of the premises.
  • Not disturb the neighbors’ peaceful enjoyment of the premises.

Documentation: If any portion of the deposit is withheld, the landlord/property manager must provide an itemized statement of deductions by mail to the forwarding address provided by the tenant or, if not provided, to the tenant’s last known address within the 60-day return window.

‍Penalties for Violations: Failure to return the deposit or provide an itemized statement as required within 60 days may result in the landlord/property manager being liable for up to twice the amount of the original security deposit.

Sale of the Rental Property

If the rental property is sold, the landlord/property manager must transfer all security deposit funds to the new owner and notify the tenant of the new owner’s name and address.