Landlords have the right to ask for a security deposit from their tenants under Arizona landlord-tenant laws and it’s an important part of getting your property rent ready. Security deposits act as a safety net, ensuring Arizona landlords are compensated for any loss that their tenant causes due to negligence or carelessness.

So, Arizona deposit law is something that every landlord operating in Arizona should understand, which is why we at Keyrenter Premier have put together this guide that details some of the most important parts of Arizona security deposit law.

Security Deposit Uses

There are a variety of reasons under Arizona deposit law in which a landlord can use a security deposit. The following are common examples of security deposit deductions:

Pay Utility Bills

During a tenancy, the utilities will be transferred to the tenant. Your tenant will be responsible for ensuring they are paid on time. So, if your tenant fails to do so, you may be entitled to make appropriate security deposit deductions.

certificate of deposit

Cover Cleaning Costs

As per Arizona laws, tenants must leave their rental premises in the same way found them – less normal wear and tear. Unfortunately, this does not always happen, which is why a move-out inspection is so important. Your tenant may leave it unclean and so you can hire a professional cleaner using the deposit if needed.

Recover Missing Rent

A tenant’s failure to pay rent or break their lease can cause issues and Is a breach of the property management agreement. So it is a key responsibility for landlords under the Arizona landlord-tenant law to collect rent efficiently from the rental unit.

Should the situation occur where the tenant fails to pay rent, you are entitled to use part or all the tenant’s deposits to cover any unpaid rent.

Your tenant may also choose to break their lease by abandoning the unit. To recover the lost rental income, you can make appropriate deductions to the tenant’s rental income.

Repair Excessive Property Damage

This is any damage that occurs because of abuse, negligence, negligence, or misuse by the tenant. Examples of such damage include chipped tiles, chipped countertops, holes in the walls, and unauthorized paint colors.

This excludes damage that could be defined as normal wear and tear under the rental agreement.

Maximum Security Deposit Charge

Under Arizona law, there is no security deposit limit that you can charge your Arizona tenants. The deposit must be equivalent to one and one-half months’ rent. So, if the monthly rate is $1,500, it means that the most you can ask for a security deposit is $2,250.

The only exception under Arizona law to this is if you are renting mobile home spaces. In this case, the maximum limit will be twice the amount of one month’s rent detailed on the signed lease agreement.

Additional Pet Deposit

If you accept pets, then you have a right to ask for additional pet deposits from your Arizona tenant. But unlike a security deposit, you will be under no obligation to refund it back.

The only group of tenants that are exempt from paying the pet deposit is disabled tenants who use service animals. According to the Fair Housing Act, forcing a disabled tenant to pay extra to have a service animal would be considered discriminatory. The Fair Housing Act is a federal law and so it applies throughout the country.

Non-Refundable Deposits

Unlike other refundable deposits, the only requirement, under Arizona security deposit laws, for using a non-refundable is that you put it in writing. You have an obligation to let your tenant know of the specific fee amount as well as the purpose for collecting it.

Besides pet fees, other nonrefundable fees include parking fees and redecorating fees that could be covered by security deposits.

Storage of a Tenant’s Security Deposit

Under Arizona’s security deposit laws, Arizona security deposits do not have any specific rules on how landlords should store their tenant’s security deposits. You do not have to necessarily keep it in a financial institution.

Unlike most states, landlords can use the deposit during the tenancy. However, you must make sure the funds are available at the time the tenant is leaving.

Written Notice of Receipt

As per Arizona security deposit laws, tenants have a right to be notified after the landlord receives their security deposit. Also, landlords have an obligation to supply their tenants with a move-in form when the tenant takes the rental’s possession.

Your tenant will use the move-in form to jot down any damage that may exist in the unit.

certificate of deposit

Walk-Through Inspections

Landlords in Arizona must conduct a move-out inspection. Your tenant has a right to be present if they inform you of their intention to be present in advance. However, you reserve the right not to allow them to be present if they are being evicted or you fear for your own safety.

Last Month’s Rent

Can a tenant in Arizona use the deposit as last month’s rent?

Not usually. However, the landlord requesting it can get their tenant’s agreement to use the deposit as the last month’s rent, in writing.

Returning a Tenant’s Security Deposit

Once the tenant has moved out, you have exactly fourteen business days to return the security deposit in Arizona (or whatever amount remains of it) if these are refundable security deposits. Additionally, you must mail the deposit via first-class mail to their last known address. It is your tenant’s responsibility to provide you with one.

If the landlord fails to provide a receipt it can leave them liable should there be any security deposit disputes.

In case you have made deductions, you must include a written itemized list alongside the remaining portion of the deposit.

The itemized list must explain to the tenant the reason for the deductions, as well as provide the approximate cost of repair for each item listed.

returning security deposit

Sale of the Rental Property

In this case, the incoming landlord is responsible for adhering to the security deposit law after the property’s ownership changes hands.

Bottom Line

Understanding Arizona’s security deposit law is an especially important aspect of running a rental property in Arizona. Landlords need to understand not only how and when to use the deposit but also how it is stored and how tenants can reclaim it.

If you have any further questions regarding this, how to manage a lease agreement, or any other aspect of your rental business, it’s a good idea to contact a property management company. So, please do not hesitate to contact us at Keyrenter Premier.

Disclaimer: This blog should not be used as a substitute for legal advice from a licensed attorney. Laws frequently change, and this post might not be updated at the time of your reading. Please contact us for any questions you have regarding this content or any other aspect of your property management needs.