A security deposit is an amount of money that a tenant pays their landlord before signing the lease agreement. A Missouri security deposit is refundable at the end of the lease so long as the tenant has abided by all terms of the lease agreement and all aspects of Missouri's landlord tenant law.
While Missouri security deposit law doesn't require tenants to pay security deposits, landlords do have a right to collect them. But if security deposits are wrongfully withheld, there can be legal consequences.
As a Missouri landlord, you must follow Missouri's landlord tenant laws when it comes to handling all tenant’s security deposits. The following is a basic overview of the Missouri Security Deposit Law.
1. Is there a limit to how much a landlord can charge as security deposit?
Yes, according to Missouri security deposit laws and Missouri's landlord tenant laws, there is a limit to how much a landlord can charge as a deposit. A Missouri landlord can collect a maximum security deposit amount of two months' rent.
As an example, say a landlord sets their tenants monthly rent (MO Rev Stat § 535.300 (2)) at $1,500. The maximum security deposit that landlord could charge as a security deposit would not exceed two months rent. In this case, $3,000.
2. Can you charge your tenant a non-refundable deposit?
According to Missouri's landlord tenant law, nonrefundable security deposits are illegal. All security deposits received from a tenant are refundable at the end of their rental agreement.
That said, Missouri landlords have a right to make deductions from their tenants' security deposits in certain situations. For instance, in case the tenant fails to pay monthly rent or causes excessive property damage that goes beyond normal wear and tear. In such cases, you may be able to make appropriate deductions from their deposit to cover your losses.
3. What reasons may warrant a Missouri landlord to make deductions to a tenant’s security deposit?
Even though Missouri landlords have a right to make deductions to a tenant’s deposit in certain cases as per Missouri rental laws. (MO Rev Stat § 535.300 (4)). Missouri law dictates that if a landlord wrongfully withholds a security deposit, there can be legal issues. Here are some example situations where a landlord could recover a security deposit.
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To cover unpaid utilities. Naturally, after a tenant signs a rental agreement on a rental unit, they will become responsible for paying certain utilities. And when the tenant leaves the unit, they will be required to have cleared those utilities. If they don’t, as per Missouri's security deposit law, the landlord can make appropriate deductions on their security deposit to clear those bills.
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To cover excessive cleaning costs. A tenant is usually required to return the rental unit in the same condition they found it. Of course, less normal wear and tear. If the condition of the rental unit exceeds normal wear and tear upon moving out, the landlord can hold the tenant financially liable for the actual costs of cleaning.
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To cover unpaid rent. A tenants failure to pay rent is a serious violation of the rental agreement. So, should it happen, a landlord can cover their rent losses by making deductions on the tenant’s security deposit. Recovering the entire security deposit amount if needed.
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To cover excessive property damage. This is usually among the top reasons a landlord would take from a tenant’s security deposit. Examples of excessive property damage includes holes in the walls, and unauthorized paint colors. A landlord cannot recover a security deposit for normal wear and tear.
4. How should a landlord store a tenant’s security deposit in the state of Missouri?
Missouri's landlord deposit law does not dictate how Missouri landlords should store their tenant’s security deposits. As a landlord, you are free to store it anyhow you want, as Missouri security deposit law doesn’t require it to be stored in any bank or financial institution.
As the security deposit rules and Missouri laws doesn't dictate where the deposit is stored, the account at the financial institution may be interest bearing. So if a landlord chooses to store the security deposit in an interest-bearing account, then any interest accrued will be yours. (MO Rev Stat § 535.300 (2)).
5. Can a Missouri tenant use the security deposit as last month’s rent?
No. As per Missouri's security deposit law, a tenant cannot not use their security deposit as last month’s rent.
6. Do you have to provide the tenant with a receipt after receiving their deposit?
In a state like Florida, for example, landlords are required to provide their tenants with a receipt after receiving their security deposit. And they must do so within 30 days. An adequate notice must include important details such as:
- Where any security deposits are being stored.
- If each tenants security deposits are kept separately or if they have been commingled with others.
- The interest rate the funds are expected to accrue.
But is any of these required for under security deposit law Missouri landlords? No! Under Missouri security deposit law, a landlord has no obligation to notify their tenant of the receipt of their security deposit. It’s up to the landlord to decide whether they’ll give a receipt for the security deposit or not.
7. Does your tenant have a right to a walk-through inspection?
As a Missouri landlord, you must perform a walk-through inspection once your tenant moves out. The inspection helps in determining whether the tenant has returned the property in good state or not.
Now, depending on the state, a tenant may or may not have a right to be present during a walk-through inspection. As per Missouri law though, tenants have a right to be present and for it to be held at a reasonable time.
You must notify them about the date and time of the inspection. The notice must be in writing, and the inspection must be held at a “reasonable time.”
In case the tenant has caused excessive property damage that goes beyond ordinary wear and tear, you may deduct the appropriate amount from their security deposit. Ensure that the damage is excessive as normal wear and tear is not covered by the security deposit.
8. When must you return the tenant’s security deposit after they move out?
Once the tenant moves from the rented premises and the rental agreement is over, landlords have 30 days to return a tenants' security deposit. Of course, the refund may be partial or full.
If there are deposit deductions, landlords must send the remaining portion of the security deposit alongside a written itemized list of the deductions made. You must provide this written itemized list within the 30 days.
If there are no deductions, then you must also refund the tenant their entire deposit within the 30 day window. If a landlord wrongfully withholds a security deposit, they may be liable for twice the security deposit.
9. What should happen if the property is sold during an active lease agreement?
In such a case, landlords have two options to consider. You may consider returning the entire security deposit back to the tenant. Otherwise, have the bank or financial insitution transfer all the tenant’s security deposit to the incoming landlord. The incoming landlord will then be responsible for notifying the tenant that their rented property has exchanged hands.
Disclaimer: This blog is only meant to be educational. For further help regarding security deposits, landlords in Missouri will need to seek the help of either a qualified attorney or an experienced property management company.
