Key Takeaways
- No Security Deposit Limit: Oklahoma law does not cap the amount landlords can charge for a security deposit, but excessive amounts may deter potential tenants.
- Proper Handling Required: Security deposits must be held in a separate escrow account at a federally insured bank; mixing funds is illegal and can lead to severe penalties.
- Deductions Must Be Lawful and Reasonable: Landlords may deduct for unpaid rent, utilities, and damage beyond normal wear and tear, but must provide an itemized statement if deductions are made.
- 45-Day Return Deadline: Landlords have up to 45 days after a tenant’s request to return the deposit, or provide a detailed deduction statement—failure to request within 6 months means forfeiture by the tenant.
As a landlord in Oklahoma, you enjoy certain rights under the statewide landlord-tenant law. One of these rights is the requirement that first-time tenants pay a security deposit before moving in.
The security deposit can help cushion you financially against certain negligent actions by a tenant, such as failing to pay rent, causing damage exceeding normal wear and tear, or violating a term of the lease that causes you financial damage.
This right, however, isn’t without its limits. There are certain things you must keep in mind when it comes to handling a tenant’s security deposit in Oklahoma. For example, you must store a tenant’s security deposit in a particular manner. You must also return it within a certain time frame after the tenant leaves, among other things.
Violating the Oklahoma security deposit laws, as is the case with other laws under Title 41 of the state’s statutes, can be costly. That’s why it pays to familiarize yourself with the OK landlord-tenant law before renting out your property.
In this blog by Oklahoma Red Door Management, we’ll go over the important basics of the Oklahoma security deposit laws.
Security Deposit Limit
Different states have different rules when it comes to the maximum security deposit landlords can charge. In the neighboring state of Missouri, for instance, landlords have a maximum limit of 2X the monthly rent.
The same is also true for the state of Colorado, the northwestern neighbor, with some exceptions for mobile homes.
That said, Oklahoma doesn’t require landlords to abide by any limit. You can collect as much or as little as you please. Avoid overcharging tenants, though. Asking for a security deposit that is, say, 3X the monthly rent amount, can be counterproductive. Tenants may opt for other reasonably priced homes instead, thus increasing your vacancy rates.
Additional Pet Deposits
In Oklahoma, landlords can charge for additional pet deposits. But, please note that it’d be discriminatory to ask for an extra deposit or fee from tenants with service dogs or emotional support animals.
The Fair Housing Act in Oklahoma requires landlords to treat tenants fairly and equally, regardless of their disability or any other protected class. Furthermore, service dogs and emotional support animals are not pets, but working animals.
Security Deposit Holdings
As a landlord in Oklahoma, you must store your tenant’s security deposit in a particular way. The following are your responsibilities in this regard:
- You must hold tenants’ security deposits in an escrow account.
- The account holding the tenant’s security deposits must be in a federally insured financial institution.
- You must not mix the tenant’s deposit with any of your funds.
Failure to abide by any of these rules can result in possible jail time. Specifically, the punishment can result in you spending up to 6 months in a county jail and still be liable to pay the tenant up to 2X the wrongfully withheld amount.
Security Deposit as Taxable Income
Tenants’ security deposits only become taxable income if withheld for certain reasons. For example, if the tenant moves out without paying due rent, or before fixing excessive property damage.
In such cases, any portion you withhold for such reasons would need to be reported during your next tax filing for the year in which the deductions occurred.
Sale of an Occupied Rental Property
Before you can transfer property ownership to someone else, there are certain things you’ll need to do if there is a tenant in place. One option would be to transfer the security deposit to the new landlord. Next, you’ll need to notify the tenant of the incoming landlord’s name and address.
The other option would be to transfer the deposit, less any allowable deductions, to the tenant. You’d then need to notify the incoming landlord of the action. Once you’ve done either of these things, you’ll cease further responsibility regarding holding the tenant’s deposit.
Security Deposit Deductions
Oklahoma law allows landlords to make deductions from a tenant’s security deposit for certain reasons. Once the tenant moves out, you can withhold part or all of their deposit due to the following.
- Unpaid rent
- Unpaid utilities
- Cost of fixing excessive property damage
- Unpaid late fees
There is also no legal limit to the deductions you can make, only that they be reasonable. And if your expenses exceed the tenant’s deposit, you can seek additional damages from the tenant. Even if that would mean suing them in a small claims court.
Excessive Property Damage vs. Normal Wear and Tear
As a landlord, it’s important to know the different types of damage that can occur in a rental property. This can help you avoid potential conflicts or misunderstandings when it comes to security deposit deductions.
Normal wear and tear is the expected damage that can occur on a rental property. Examples include lightly scratched glass, stained bath fixtures, faded paint, or loose door handles. Landlords are responsible for the cost of fixing these.
As for excessive property damage, it occurs due to a tenant’s negligence, carelessness, abuse, or misuse. Common examples include missing fixtures, holes in the wall, broken tiles or windows, or heavily stained or burned carpets. You can hold the tenant responsible for the cost of fixing these after they move out.
Timeframe for Security Deposit Return in Oklahoma
After a tenant moves out of their rented premises, you’ll have up to 45 days to return it to them after they request its return. You must return it either by mail or by personal delivery. If you’ve made deductions, then you must provide the tenant with an itemized list. If the tenant fails to request its return within 6 months, the deposit will become yours to keep.
Bottom Line
These are the important basics of the Oklahoma security deposit laws you must abide by. If you find this daunting, you could ask a reputable property management company for help.
Oklahoma Red Door Management can help sort out all your landlording needs in Oklahoma City and the surrounding areas. We’ve been providing OK property owners with full-service property management services for more than 20 years. Get in touch to learn more!
Disclaimer: Please note that the information provided in this blog is intended for general guidance and should not be considered as a replacement for professional legal advice. It is important to be aware that laws pertaining to property management may change, rendering this information outdated by the time you read it.