Landlord’s Legal Responsibilities with Residential Security Deposits

Landlords possess an important responsibly in handling the security deposit of their tenants. While a security deposit may seem to be a common occurrence expected with any residential lease, the laws surrounding a landlord’s possession of a security deposit are strict and potentially dangerous.

This article only discusses security deposits as they relate to “Landlords” as that term is defined under RSA 540-A. This statute defines a “Landlord” as a person or company who rents or leases a unit for purposes other than vacation or recreation. In addition, a landlord is someone who owns more than one rental property or leases units in an owner-occupied building of 5 units or more. This article does not discuss the legal requirements for those landlords not meeting this definition.

Under NH law, a Landlord may require a security deposit in an amount equal to one month’s rent. If the tenant furnishes this security deposit by check, the Landlord is not required to furnish a signed receipt stating the amount of the deposit and specifying where the deposit will be held.

One key point to remember is the security deposit held by a Landlord continues to be the money of the tenant. The security deposit cannot be mingled with personal monies of the Landlord and should be placed in its own separate account. The Landlord however may mingle all security deposits held in a single account. As tenancies commonly last for a year or more, the Landlord must pay the tenant the interest accrued on their security deposit if held for a year or more.

An often overlooked duty of the Landlord is the requirement of notifying the tenant in writing upon selling or transferring the property. This notice must inform the tenant who is in possession of their security deposit and where the security deposit is located.

Once the tenancy has terminated, the security deposit must be returned within 30-days. Within this 30-day window, the Landlord needs to inspect the property for any damages which may be attributable to the tenant. Should the Landlord find damages, NH law becomes very specific. The Landlord may deduct the cost of repairing tenant damages but the Landlord must provide the tenant with a written, itemized list of all damages the Landlord claims the tenant is liable. This list must provide specific repairs necessary to correct the damage and evidence the repairs have or will be made, such as receipts for materials or labor estimates.

A Landlord who is in violation of RSA 540-A, may be liable to the tenant in damages equal to twice the security deposit plus interest and potentially further damages. When a Landlord owns multiple rental properties, violating NH security deposit laws may quickly result in the Landlord being liable to multiple tenants at once.

Due to the specificity of security deposit laws in New Hampshire, it is advisable to consult with legal counsel to ensure you do not violate RSA 540-A, which may result in adverse action taken against you in court.


By: Austin M. Mikolaities, Esq.