Security deposits in Kentucky are regulated by Kentucky Revised Statutes, Title 32, § 383.500 to § 383.715 (the “Uniform Residential Landlord and Tenant Act”). Municipalities can opt into the Uniform Residential Landlord and Tenant Act, and not all have done so. To ensure full compliance, verify the regulations applicable in your area.

Maximum Security Deposit

Kentucky state law does not currently have a limit on the amount that landlords/property managers can require as a security deposit.

Holding & Interest Requirements

Holding Requirements: The security deposit must be held in a bank or other lending institution subject to regulation by the state of Kentucky or the federal government. Security deposits cannot be commingled with the landlord/property manager’s other funds.

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

Information Provided to Tenant: Landlords/property managers must inform the tenant of the account number and the location of the bank or other lending institution where their security deposit is held. 

Deposit Refunds

Timeline: Under Kentucky state law, landlords/property managers must provide tenants with 30 days’ notice of any deductions to their security deposit, sent to the tenants’ last known or reasonably determinable address. In the event the landlord/property manager does not receive a response from the tenant within 60 days of sending such notification, the landlord/property manager may retain the security deposit.

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

• Unpaid rent (as long as the tenant does not demand return of the deposit within 30 days)
• Damages beyond normal wear and tear, including cleaning costs to restore the unit to its condition at the start of the tenancy

If the tenant leaves the property with outstanding rent, the landlord/property manager may use the security deposit to cover any missed rent after 30 days, so long as the tenant leaves without paying the last month’s rent and does not demand the return of the security deposit. 

Documentation of Deductions: At the end of the tenancy, the landlord/property manager must inspect the premises, compile a comprehensive list of any damages and the estimated cost of repairs, and provide the list to the tenant. The tenant has the right to inspect the premises to determine the accuracy of the list. The landlord/property manager and the tenant must both sign the list, which confirms its accuracy. If the tenant does not sign, they must provide a written statement identifying the items on the list that they disagree with and sign that statement instead.

‍Penalties for Violations: Failure to comply with the security deposit holding requirements or return the deposit as required may result in the landlord/property manager being liable for the full security deposit and 2x the portion that is wrongfully withheld, plus reasonable attorney’s fees and court costs if the tenant wins in a lawsuit.

Sale of the Rental Property

If the property is sold, the new owner must either return the security deposit or transfer the deposit to a new account and inform the tenant of the transfer. The original landlord/property manager is relieved of liability with respect to the security deposit after providing the tenant with written notice of the sale.