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CHAPTER 710-A
SECURITY DEPOSITS ON RESIDENTIAL RENTAL UNITS

Definitions
As used in this Part, unless the context otherwise indicates, the following words shall have the following meanings. [1977, c. 359 (new).]

1.  Normal wear and tear. "Normal wear and tear" means the deterioration that occurs, based upon the use for which the rental unit is intended, without negligence, carelessness, accident or abuse of the premises or equipment or chattels by the tenant or members of the tenant's household or their invitees or guests. The term "normal wear and tear" does not include sums or labor expended by the landlord in removing from the rental unit articles abandoned by the tenant such as trash. If a rental unit was leased to the tenant in a habitable condition or if it was put in a habitable condition by the landlord during the term of the tenancy, normal wear and tear does not include sums required to be expended by the landlord to return the rental unit to a habitable condition, which may include costs for cleaning, unless expenditure of these sums was necessitated by actions of the landlord, events beyond the control of the tenant or actions of someone other than the tenant or members of the tenant's household or their invitees or guests. [1997, c. 261, 1 (amd).]

2.  Security deposit. "Security deposit" means any advance or deposit, regardless of its denomination, of money, the primary function of which is to secure the performance of a rental agreement for residential premises or any part thereof. [1977, c. 359 (new).]  Chap. 710-A, 14 6031.

Maximum security deposit
    No lessor of a dwelling intended for human habitation shall require a security deposit equivalent to more than the rent for 2 months. [1977, c. 359 (new).] Chap. 710-A, 14 6032.

Return of the security deposit
1.  Normal wear and tear. A security deposit or any portion of a security deposit shall not be retained for the purpose of paying for normal wear and tear. [1977, c. 359 (new).]

2.  Return; time; retention. A landlord shall return to a tenant the full security deposit deposited with the landlord by the tenant or, if there is actual cause for retaining the security deposit or any portion of it, the landlord shall provide the tenant with a written statement itemizing the reasons for the retention of the security deposit or any portion of it:

A.  In the case of a written rental agreement, within the time, not to exceed 30 days, stated in the agreement; and    [1977, c. 359 (new).]

B.  In the case of a tenancy at will, within 21 days after the termination of the tenancy or the surrender and acceptance of the premises, whichever occurs later. [1977, c. 359 (new).]
    The written statement itemizing the reasons for the retention of any portion of the security deposit must be accompanied by a full payment of the difference between the security deposit and the amount retained.
    Reasons for which a landlord may retain the security deposit or a portion of the security deposit include, but are not limited to, covering the costs of storing and disposing of unclaimed property, nonpayment of rent and nonpayment of utility charges that the tenant was required to pay directly to the landlord. The landlord is deemed to have complied with this section by mailing the statement and any payment required to the last known address of the tenant. [1995, c. 52, 1 (amd).]

3.  Penalty. If a landlord fails to provide a written statement or to return the security deposit within the time specified in subsection 2, the landlord shall forfeit his right to withhold any portion of the security deposit.  Chap. 710-A, 14 6033. [1977, c. 359 (new).]

Wrongful retention; damages
1.  Notice to landlord of intention to bring suit; presumption on failure to return deposit. If the landlord fails to return the security deposit and provide the itemized statement within the time periods in section 6033, the tenant shall give notice to the landlord of the tenant's intention to bring a legal action no less than 7 days prior to commencing the action.  If the landlord fails to return the entire security deposit within the 7-day period, it is presumed that the landlord is wrongfully retaining the security deposit. [1995, c. 52, 2 (amd).]

2.  Double damages for wrongful retention. The wrongful retention of a security deposit in violation of this chapter renders a landlord liable for double the amount of that portion of the security deposit wrongfully withheld from the tenant, together with reasonable attorney's fees and court costs. [1995, c. 52, 2 (amd).]

3.  Burden of proof. In any court action brought by a tenant under this section, the landlord has the burden of proving that the landlord's withholding of the security deposit, or any portion of it, was not wrongful.  Chap. 710-A, 14 6034. [1995, c. 52, 2 (amd).]

Transfer of security deposit
1.  Landlord's termination of interests in dwelling unit. Upon termination of a landlord's interest in the dwelling unit, whether by sale, assignment, death, appointment of a receiver or otherwise, the person in possession of a security deposit, including, but not limited to, the landlord, the landlord's agent or the landlord's executor shall, upon the transfer of the interest in the dwelling unit:

A.  Provide to the landlord's successor in interest an accounting of the amount of each security deposit paid by each tenant and held by the person in possession of the security deposits, transfer the funds or any remainder after lawful deduction under this chapter to the landlord's successor in interest and provide to the tenant by mail:

(1)  Notice of that transfer;

(2)  Notice of the transferee's name and address; and

(3)  A copy of the accounting of the amount of the
security deposit transferred; or [1999, c. 213, 1 (rpr).]

B.  Return the funds or any remainder after lawful deductions under this section to the tenant. [1999, c. 213, 1 (rpr).]
[1999, c. 213, 1 (rpr).]

2.  Release from liability following compliance. Upon compliance with this section, the person in possession of the security deposit shall be relieved of further liability, and the transferee, in relation to those funds, shall be deemed to have all of the rights and obligations of a landlord holding the funds as a security deposit.  Chap. 710-A, 14 6035. [1977, c. 359 (new).]

Waiver of provisions
    Any provision, whether oral or written, in or pertaining to a rental agreement whereby any provision of this chapter for the benefit of a tenant or members of its household is waived shall be deemed to be against public policy and shall be void. [1977, c. 359 (new).]  Chap. 710-A, 14 6036.

Exemptions
1.  Federally guaranteed mortgages. Any of the provisions of this chapter relative to security deposits which may be in conflict with the terms of a mortgage guaranteed by the United States or any authority created under the laws thereof, shall not apply to security deposits held by a lessor who appears as the mortgagor in such a mortgage. [1977, c. 359 (new).]

2.  Owner-occupied buildings of 5 or fewer units. This chapter shall not apply to any tenancy for a dwelling unit which is part of a structure containing no more than 5 dwelling units, one of which is occupied by the landlord. [1977, c. 359 (new).] Chap. 710-A, 14 6037.

Treatment of security deposit
    During the term of a tenancy, a security deposit given to a landlord as part of a residential rental agreement may not be treated as an asset to be commingled with the assets of the landlord. All security deposits received after October 1, 1979 must be held in an account of a bank or other financial institution under terms that place the security deposit beyond the claim of creditors of the landlord, including a foreclosing mortgagee or trustee in bankruptcy, and that provide for transfer of the security deposit to a subsequent owner of the dwelling unit or to the tenant in accordance with section 6035. Upon the transfer of the dwelling unit, the new owner shall assume all responsibility for maintaining and returning to tenants all security deposits accounted for and transferred pursuant to section 6035.  Upon request by a tenant, a landlord shall disclose the name of the institution and the account number where the security deposit is being held. A landlord may use a single escrow account to hold security deposits from all of the tenants. [1999, c. 213, 2 (amd).]  Chap. 710-A, 14 6038. 

                      

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