Need legal advice/clarification on security deposit

Member since 2021 · 16 posts · 0 votes

I am about to renew my lease with one of the tenants. Non refundable security deposit came down to an issue. In Utah, we are allowed to do non refundable deposits. However, I took the security deposit about 4 years ago. Is it not legal to convert part of the deposit non-refundable? When we renew, essentially it is new contract but becuase deposit was taken long ago, I think it would be a problem?? Just wanted to learn and get clarification. Any real estate paralegal or lawyer here? Please give me some advice. Thanks.

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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
2mo
A "nonrefundable deposit" is an oxymoron.
A "deposit" by definition is refundable.
So, call it a "fee".
That is basically what it appears Utah statutes state:
"In Utah, nonrefundable fees or deposits are legal only if they are explicitly stated in writing. Per Utah Code § 57-17-2, any fee or portion of a deposit that is nonrefundable must be clearly identified and disclosed to the renter in the lease agreement or a separate written document at the time it is collected; otherwise, it is considered refundable by default. [1, 2, 3, 4, 5]Rules for Nonrefundable Fees
- Written Disclosure: Must be in the written lease or a signed document.
- Default Rule: If the agreement does not state that a fee is nonrefundable in writing, the landlord must treat it as refundable.
- Common Types: Pet fees, carpet cleaning charges, and key setup fees. [1, 2]
General Deposit Rules in Utah
- No Limit: Utah law does not set a maximum dollar limit on total security deposits.
- Refund Window: Refundable portions must be returned to the tenant within 30 days after the tenancy ends."
Bottomline - as long as tenant signs a new lease that complies with state law, you can do it.
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Diana KhanPro Member
Attorney · 10451 Mill Run Cir #755 Owings Mills, MD 21117 · Member since 2024 · 672 posts · 238 votes
2w
Quote from @Julie Park:
I am about to renew my lease with one of the tenants. Non refundable security deposit came down to an issue. In Utah, we are allowed to do non refundable deposits. However, I took the security deposit about 4 years ago. Is it not legal to convert part of the deposit non-refundable? When we renew, essentially it is new contract but becuase deposit was taken long ago, I think it would be a problem?? Just wanted to learn and get clarification. Any real estate paralegal or lawyer here? Please give me some advice. Thanks.
@Julie Park, I think your concern about when the deposit was collected is valid. Utah does allow certain nonrefundable deposits or fees, but the law requires the nonrefundable portion to be disclosed in writing when the money is collected. Since you received this deposit four years ago, I wouldn't assume that signing a new lease automatically allows you to change part of it into a nonrefundable amount.
I'm a real estate attorney, broker, and investor based in Maryland, and I work with landlords on lease agreements, security deposits, and tenant related matters. One thing I've learned is that even when both parties agree to new lease terms, it's important to understand how those changes affect money already collected under the original agreement. I'd have a Utah landlord tenant attorney review both leases before making that change.
I appreciate you asking this before renewing the lease, @Julie Park. Security deposit issues can become complicated when the terms aren't clear, and it's always better to address those questions early. This is closely related to the work I do, so I'd be happy to stay connected!
[email protected]240-266-0291
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