By Upkeep Media | January 10th, 2024

For landlords, requiring a security deposit before a tenant can move in comes with a a number of benefits. Including, helping cover unpaid utilities, lost rent payments, and excessive property damage upon move-out. 

That said, in Arizona, landlord-tenant laws state you must abide by certain responsibilities when collecting security deposits from tenants. Landlords must, for instance, charge the right amount, only make legitimate deductions, and return it on time. In this blog, you’ll learn all the basics of the Arizona security deposit laws!

Security Deposit Limits in Arizona

As a landlord, you must abide by a certain limit when charging tenants a security deposit. Arizona security deposit laws, specifically, require that the maximum limit be the equivalent of 1.5X the monthly rent. So if, for example, the monthly rent is $1,000, then the maximum deposit to ask the tenant would be $1,500. 

Note that Arizona law permits landlords to ask for advance rent. That is, both the first and last month’s rent. And whereas such payment isn’t a security deposit, landlords often require it before a tenant can move in.  

Nonrefundable Deposits Under Arizona Security Deposit Laws

Arizona landlords are allowed to charge their tenants non-refundable security deposits. But if you choose to do this, you must explain the purpose of the deposit to the tenant. You must do this before the tenant moves in, ideally by having a term in the lease. 

a security deposit with the word approved stamped in red on it

If you fail to do so, you must return all undesignated fees and deposits to the tenant after they move out. Examples of nonrefundable deposits include pet deposits, cleaning fees, and lease buyout fees. 

Required Storage of Security Deposits 

Some states impose specific rules on how landlords must store their tenants’ security deposits. This is not the case for Arizona landlords. The state law doesn’t require landlords to follow any specific rules when storing their tenant’s security deposit. You don’t even have to keep it in a financial institution. 

Matter of fact, you may be able to use part of it during the term of the lease for specific situations spelled out in the lease agreement. In such a case, however, you must have the funds available to the tenant after they move out. 

Providing Tenants with a Receipt of the Security Deposit

Under Arizona law, landlords must provide and/or disclose certain information to tenants. This includes furnishing the tenant with signed copies of the lease agreement, security deposit receipt, and move-in checklist form. The tenant will then need to use the move-in form to jot down any existing damages they find when moving in. This will help reduce disputes about the return of the deposit at the end of the tenancy.

A person in glasses being handed a document

Conducting Move-Out Inspections 

As a landlord, you must conduct a move-out inspection before the tenant can move out of the property. The tenant has a right to be present during the inspection if they let you know of their intention to be present in advance.

The goal of the inspection is to compare the initial and the present condition of the property. This can help you determine whether the tenant is responsible for any repairs or damages that exceed normal wear and tear. Below is a basic overview of what goes on during a walk-through/ move-out inspection:

  • Going through every room to ascertain the condition of things like walls, floors, appliances, and electrical outlets. 
  • Testing everything to ensure it is working as it should. This can include toilets, faucets, and light switches. 
  • Documenting damages using detailed descriptions and photos. 
  • Fill out a checklist that covers everything inspected. 

Deductions a Landlord Can Make to a Tenant’s Security Deposit in Arizona

You may be able to make deductions to a tenant’s security deposit to cover certain things including unpaid rent, utility fees, cleaning fees, and damage beyond normal wear and tear. 

The state of Arizona doesn’t have a formal definition of “normal wear and tear” within its state statutes. That being said, the general definition still holds. Normal wear and tear refers to the expected, gradual deterioration of a property due to normal use. Examples of normal wear and tear on a property include minor paint scuffs, worn carpets, and faded blinds from sunlight. 

A legal balance, house figurine and judges gavel

Damage beyond normal wear and tear is a serious type of rental damage that you can hold the tenant liable for fixing. This type of damage occurs due to unreasonable tenant actions or neglect. Examples of damages beyond normal wear and tear include ripped furniture upholstery, broken appliances, and significant water damage on the floor. 

Deductions involving damages exceeding normal wear and tear are often a source of conflict between landlords and tenants, though. To minimize such conflicts, make sure to spell out exactly what deductions you can make to the deposit. 

Required to Return Dates for Tenants’ Security Deposits

Landlords must return part or all of the tenant’s deposit after the tenant moves out. In Arizona, this time frame is 14 days from the date of lease termination. The 14 days don’t factor in holidays or weekends. 

You must send the portion of the deposit to the tenant via first-class mail to their last known mailing address. If you’ve made deductions to the deposit, you must send an itemized list of the deductions alongside the portion you’re returning. 

Bottom Line 

Landlords must follow the state’s security deposit laws when requiring security deposits from tenants. Failure to do so has the potential to severely dent your bottom line. 

Do you have a question or need expert help in managing your Arizona rental property? If so, then look no further than Mark Brower Properties. Contact our property management company today to learn more about our services!

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 on property management may change, rendering this information outdated by the time you read it.