Overview
Delaware’s security deposit laws aim to protect both tenants and landlords by outlining clear rules on how deposits must be handled, including limits, storage, and return timelines.
Under Delaware Code Title 25, Chapter 55, § 5514, landlords are required to comply with specific procedures related to collecting, holding, and returning security deposits. Non-compliance may result in forfeiture of the deposit and potential damages.
This guide covers:
How much landlords can charge
Where deposits must be stored
Rules for returning security deposits
Penalties for non-compliance
Related Statute: Del. Code tit. 25, § 5514
1. Security Deposit Limits & Storage Requirements
Maximum deposit: Landlords may charge no more than one month’s rent as a security deposit for leases lasting one year or longer. For month-to-month leases, higher deposits may be permitted.
Storage requirements: Security deposits must be held in an escrow account at a federally insured financial institution that does business in Delaware.
Tenant notification: Within 20 days of receiving the deposit, landlords must provide written notice to the tenant of the name and location of the bank where the deposit is being held.
Law Reference: Del. Code tit. 25, § 5514(b)
2. Security Deposit Returns & Allowable Deductions
Return deadline: Landlords must return the security deposit within 20 days of the lease termination and tenant vacating the unit.
Permissible deductions: Deductions may include unpaid rent, damages beyond normal wear and tear, and costs due to tenant breach of the lease.
What landlords cannot deduct: Landlords cannot deduct for normal wear and tear, such as worn carpet or minor scuffs.
Itemized statement required: If any deductions are made, a written itemized list must accompany the returned balance.
Law Reference: Del. Code tit. 25, § 5514(f)
3. Interest Payments & Documentation Requirements
Interest payments: If the deposit is held for more than one year, the landlord must pay the tenant annual interest at a rate determined by the State of Delaware.
Move-in condition report: While not explicitly required, landlords and tenants are encouraged to document the condition of the rental unit at move-in and move-out to prevent disputes.
Tenant review period: Tenants should inspect the unit at move-in and return a signed condition report, if provided.
Failure to provide documentation: Landlords who fail to return the deposit or provide required notices may lose the right to retain any portion of the deposit.
Law Reference: Del. Code tit. 25, § 5514(c)
4. Penalties for Mishandling Security Deposits
Delaware law includes penalties for failure to follow security deposit procedures.
Failure to return the deposit within 20 days may result in the landlord being liable for double the amount wrongfully withheld, plus court costs.
Failure to place the deposit in a proper account or disclose its location can also lead to loss of the right to withhold any part of the deposit.
Law Reference: Del. Code tit. 25, § 5514(g)
Key Takeaways
Security deposits are capped at one month’s rent for leases one year or longer.
Deposits must be held in a Delaware-based escrow account, and tenants must be notified of the bank’s name and location.
Deposits must be returned within 20 days, with an itemized list of any deductions.
Interest must be paid if the deposit is held for more than one year.
Non-compliance may result in double damages and loss of deposit withholding rights.
By understanding and following Delaware security deposit laws, landlords can remain compliant, and tenants can ensure a fair and prompt return of their deposit.
Disclaimer: This blog post is intended for informational purposes only and does not constitute legal advice. Readers should not act or refrain from acting based on any information included in this post without seeking legal counsel or other professional guidance specific to their situation. The information is provided “as is” without any representations or warranties of any kind, express or implied, including but not limited to the accuracy, completeness, or reliability of the content. Laws and regulations may change and vary by jurisdiction.
