Security deposits in North Dakota are regulated by North Dakota Century Code § 47-16 and § 47-30.2. Certain municipalities may have local laws that supplement state regulations. To ensure full compliance, verify the regulations applicable in your area.

Maximum Security Deposit

North Dakota state law generally limits security deposits to one month’s rent. However, a landlord/property manager may require two months’ rent from a tenant who has been convicted of a felony or has had a judgment entered against them for breaching a previous lease. Landlords/property managers may also charge a pet deposit up to $2,500 or two months’ rent, whichever is greater, unless the animal is a service or companion animal for a tenant with a disability.

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Holding & Interest Requirements

Holding Requirements: North Dakota state law requires security deposits to be held in a federally insured interest-bearing checking or savings account. 

‍Interest on Deposits: Landlords/property managers must pay interest to tenants on security deposits upon termination of the lease. However, interest is not required to be paid to tenants if the lease is for less than 9 months.

Information Provided to Tenant: North Dakota state law does not currently require landlords/property managers to disclose where the security deposit is held.

Deposit Refunds

Timeline: Within 30 days of vacancy, the landlord/property manager must either (1) return the full security deposit and accrued interest to the tenant, or (2) provide the tenant with an itemized notice of any deductions to the security deposit together with the portion of the security deposit and accrued interest being returned, by personal delivery or mail to the address provided by the tenant. 

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

• Unpaid rent
• Damages beyond normal wear and tear
• Cleaning costs to restore the rental unit to its condition at the start of the tenancy

If the security deposit and accrued interest is not claimed by the tenant within 1 year, the landlord/property manager must send a notice to the tenant that complies with North Dakota Century Code § 47-30.2-27 by first-class mail within 120 days, unless the landlord/property manager does not have a valid address for the tenant. Following the expiration of the 120 days, the landlord/property manager must file a report with the National Association of Unclaimed Property Administrator.

Documentation of Deductions: North Dakota state law does not require any specific documentation or level of detail to be included in the itemized notice of deductions to the security deposit.

‍Penalties for Violations: Failure to return the security deposit and accrued interest or provide the itemized notice of deductions as required by North Dakota state law may result in the landlord/property manager being liable for up to 3x the amount of deposit and interest that is wrongfully withheld, plus attorney’s fees and court costs if the tenant wins in a lawsuit.

Sale of the Rental Property

If the property is sold, the landlord/property manager must transfer the deposit and accrued interest to the new owner.