Security deposits in Delaware are regulated by Delaware Code Title 25, Chapter 55. Certain municipalities may have additional regulations. To ensure full compliance, verify the regulations applicable in your area.

Maximum Security Deposit

Security deposits are limited to one month’s rent for leases of one year or more. However, landlords/property managers may collect security deposits of more than one month’s rent for month-to-month leases of an undefined duration. If the month-to-month tenancy lasts for one year or more, the landlord/property manager must return any amount of the security deposit collected exceeding one month’s rent. Landlords/property managers may also collect a pet deposit of one month’s rent in addition to the security deposit, regardless of the duration of the lease.

Holding & Interest Requirements

Holding Requirements: Delaware state law requires landlords/property managers to keep security deposits (and pet deposits, if applicable) in an escrow account at a federally insured financial institution located in Delaware. The account must be labeled as a security deposit account and cannot be used for any other purpose.

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

Information Provided to Tenant: The landlord/property manager must provide tenants with the location of where the security deposit (and pet deposit, if applicable) is held.

Deposit Refunds

Timeline: Security deposits must be returned within 20 days of expiration or termination of the lease and sent to an address specified in the rental agreement or to a forwarding address provided by the tenant. If the tenant does not provide an address, the landlord/property manager will continue to be liable for the deposit for 1 year from the expiration or termination of the lease.

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

• Unpaid rent
• Damages beyond normal wear and tear
• Reasonable expenses incurred in renovating or re-renting the property because of the tenant’s premature termination of the lease

Documentation of Deductions: If any portion of the security deposit is withheld, the landlord/property manager must provide an itemized list of damages and repair costs to the tenant within the 20-day return window.

Damage to the premises caused by the tenant’s pet shall first be deducted from the pet deposit, if any. Such damages may only be deducted from the security deposit where the pet deposit is insufficient to remedy the full amount of the damages.

‍Penalties for Violations: Failure to return the security deposit (or pet deposit, if applicable) or provide the itemized list of deductions as required may result in the landlord being liable for twice the amount wrongfully withheld.

Sale of the Rental Property

Delaware state law does not provide specific regulations governing how security deposits must be handled when a rental property is sold.