Security deposits in Arkansas are regulated by Arkansas Code Title 18, Chapter 16, Subchapter 3. Certain municipalities may have local laws that supplement state regulations. To ensure full compliance, verify the regulations applicable in your area.

Maximum Security Deposit

Landlords who rent out six or more units, or who use a third party to manage or collect rent for a fee, may not charge a security deposit amounting to more than two month’s rent.

Holding & Interest Requirements

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

Interest on Deposits: Arkansas 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 via first-class mail to the tenant’s last known address. If the mailing is returned to the landlord/property manager and the landlord/property manager is unable to locate the tenant, the security deposit becomes the property of the landlord 180 days after the date the security deposit was mailed to the tenant.

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

• Unpaid rent
• Damages beyond normal wear and tear
• Cleaning fees that are necessary to restore the unit

Documentation of Deductions: If any portion of the security deposit is withheld, the landlord/property manager must provide the tenant with an itemized list of deductions within the 60-day return window.

‍Penalties for Violations: Failure to comply with Arkansas state security deposit law may result in the landlord/property manager being liable for any property or money due to the tenant and twice the amount of the security deposit withheld. The tenant may also be entitled to attorney’s fees and court costs in the event a lawsuit is filed against the landlord/property manager. The landlord/property manager will only be liable for costs and any amounts erroneously withheld if the landlord/property manager proves that their noncompliance resulted from an error, despite having reasonable procedures in place to prevent that error, or was based on a good-faith dispute as to the amount due.

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.