Security deposits in Arizona are regulated by Arizona Revised Statutes Title 33, Chapter 10. 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 and prepaid rent are limited to one and a half months’ rent.  

Holding & Interest Requirements

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

Interest on Deposits: Arizona state law does not currently require landlords 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. The landlord/property manager must, however, state in writing the purpose of any non-refundable security deposit. 

Deposit Refunds

Timeline: Security deposits must be returned within 14 business days (excluding Saturdays, Sundays, and other legal holidays) after the tenant vacates the property. Although Arizona state law provides that the security deposit should be returned to the tenant’s last known address by first-class mail, it alternatively allows landlords/property managers and their tenants to make other arrangements for the security deposit’s return.

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

• Unpaid rent
• Damages beyond normal wear and tear
• Costs of cleaning that are necessary to restore the unit to move-in condition
• Costs incurred because of the tenant’s abandonment of the lease

Documentation of Deductions: Within 14 days of vacancy, the landlord/property manager shall provide the tenant with an itemized list of deductions.

‍Penalties for Violations: Failure to return the security deposit or provide documentation for deductions as required may result in the landlord/property manager being liable for up to twice the security deposit amount and other damages. A tenant may be able to recover attorney’s fees and court costs if they win a lawsuit against the landlord/property manager in court.

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