Oregon Security Deposit Laws

Landlords in Oregon can request a security deposit to protect against financial risks during a tenancy. This deposit can be used for unpaid rent, property damage beyond normal wear and tear, and excessive cleaning costs.

If a tenant breaks their lease without a legally justified reason, they may still owe rent for the remainder of the lease term. In such cases, landlords can withhold part or all of the security deposit to cover the unpaid rent.

Oregon law requires landlords to provide an itemized list of deductions within 31 days after the tenant vacates. Failing to do so may result in the landlord losing the right to retain any part of the deposit. 

Deductions can also be made for cleaning costs if the property is left in an excessively dirty condition, provided it exceeds normal wear and tear. Landlords can use the deposit for repairs if significant damage occurs, such as large holes in walls or unauthorized alterations like painting. 

However, deductions cannot be made for regular wear and tear, and landlords must document all deductions clearly. If the deposit does not cover the full extent of the damages or unpaid rent, landlords can pursue legal action to recover the remaining balance.

By following Oregon’s laws, landlords can ensure proper compensation while complying with legal procedures.

Guide to Oregon Security Deposit Laws 

Maximum Security Deposit Amount

In Oregon, there’s no statewide limit on how much landlords can charge for a security deposit, allowing flexibility in setting the amount. A common approach is to charge 1.5 times the monthly rent, which typically balances financial protection and tenant affordability. 

For instance, if the rent is $2,000, a $3,000 deposit can cover unpaid rent or damage beyond normal wear and tear. However, setting the deposit too high may deter potential tenants, so it’s important to find a balance.

Oregon law requires landlords to return the security deposit within 31 days after a tenant moves out, providing an itemized list of any deductions. 

Deductions can only be made for unpaid rent, excessive damage, or cleaning beyond normal wear and tear. Setting a reasonable deposit ensures protection while complying with legal requirements.

Non-Refundable Security Deposits

In Oregon, landlords cannot charge non-refundable security deposits. All deposits must be refundable, with deductions only allowed for unpaid rent, damage beyond normal wear and tear, or necessary cleaning. 

Additionally, Oregon allows certain non-refundable fees if clearly disclosed in the rental agreement, such as a cleaning fee, but non-refundable pet fees are prohibited.

Landlords can collect a refundable pet deposit instead. Application fees are allowed but must only cover the actual cost of screening the tenant and cannot be used for profit. 

Oregon landlords may also collect last month’s rent upfront, but it must be specifically designated for that purpose and cannot be treated as a security deposit.

Other than the first month’s rent, a refundable security deposit, and a refundable pet deposit, landlords cannot impose additional fees or charges not authorized by law.

Storing the Security Deposit

In Oregon, landlords are not required to store a tenant’s security deposit in a separate account, nor does the account need to earn interest. There are no specific laws governing how or where a landlord must store the deposit, giving you flexibility. 

However, landlords are still responsible for properly handling the security deposit and must return it to the tenant within 31 days of the lease ending, with an itemized list of any allowable deductions.

Written Notices

Oregon landlords are not legally required to provide a written receipt or detailed accounting for security deposits, fees, and rent payments in the rental agreement, although it is good practice to do so.

Providing a receipt with the date, amount, names of the landlord and tenant, and method of payment can help maintain transparency. 

While landlords must return the tenant’s security deposit within 31 days of the lease ending, along with an itemized list of deductions, it’s important to clearly outline any deposit terms in the lease to avoid misunderstandings. This ensures both parties have clear expectations.

Withholding the Security Deposit

Landlords in Oregon can make specific deductions from a tenant’s security deposit under certain conditions. For example, if a tenant abandons the unit or leaves with unpaid rent, the landlord may deduct the amount owed.

Similarly, if the property is left in an unclean condition that exceeds normal wear and tear, landlords can use the deposit to cover professional cleaning costs. 

Deductions can also be made for damages beyond normal wear and tear, such as significant damage to walls or fixtures. Lastly, if the tenant has unpaid utility bills that were their responsibility, the landlord can deduct those expenses from the deposit.

All deductions must be itemized and provided to the tenant within 31 days of the lease ending.

Walk-Through Inspections

Oregon landlords are not required to conduct a walk-through inspection before a tenant moves out, and tenants do not have an explicit legal right to request one. However, if a tenant requests an inspection, the landlord may choose to conduct one to help avoid disputes over the security deposit. 

It’s a good idea for landlords to provide notice to the tenant and prepare a checklist that covers both the interior and exterior areas of the property. During the inspection, documenting any damage or issues can be useful for resolving potential disagreements over the deposit.

While not legally required, this process helps promote transparency and clear communication between the landlord and tenant.

Returning the Security Deposit

In Oregon, landlords have 31 days after a tenant moves out to return part or all of their security deposit. The deposit, along with an itemized written statement of any deductions, must be delivered to the tenant. 

While there’s no specific requirement to use first-class mail, the method should ensure the tenant receives the payment and statement.

Wrongfully withholding any portion of the deposit can result in significant penalties—landlords may be required to pay the tenant up to twice the amount wrongfully withheld.

Conclusion 

Understanding and adhering to Oregon’s security deposit laws is crucial for landlords to protect their investments and maintain good relationships with tenants. From setting the deposit amount to making permissible deductions, landlords must follow specific legal guidelines to avoid disputes and penalties. 

By providing itemized statements, returning the deposit within 31 days, and handling deposits transparently, landlords can ensure compliance with the law while safeguarding their property.

If you still have questions or need expert property management help, look no further than Century 21 Northstar. Our team can provide the professional guidance and support you need to manage your rental property effectively and in line with Oregon regulations.

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.