Minnesota sets no statutory cap on residential security deposits under Minn. Stat. § 504B.178. The landlord must return the deposit, plus 1% simple interest, within three weeks after the tenancy ends and after receiving the tenant's forwarding address, along with a written statement itemizing any withholding. Bad-faith retention exposes the landlord to penalty damages plus up to $500 punitive damages per deposit.
Under Minn. Stat. § 504B.178, no statute limits how much a landlord may collect as a security deposit. The deposit must "bear simple noncompounded interest at the rate of one percent per annum." After a tenancy ends, the landlord must return the deposit, with interest and less any lawful deductions, within "three weeks after termination of the tenancy and after receipt of the tenant's mailing address or delivery instructions" (five days if the building is condemned through no fault of the tenant). With any withholding, the landlord must "furnish to the tenant a written statement showing the specific reason for the withholding." Deductions are limited to amounts the tenant owes under the lease and damage beyond ordinary wear and tear.
Under Minn. Stat. § 504B.178, subd. 4, a landlord who wrongfully withholds owes the withheld amount plus interest as a penalty, in addition to the deposit itself. Subd. 7 adds "punitive damages not to exceed $500 for each deposit" for bad-faith retention; bad faith is presumed if the landlord fails to return the deposit within two weeks after a recovery action begins.
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