Delaware Security Deposit Laws in 2024

Introduction to Delaware Security Deposits

A security deposit is a sum of money paid by a tenant at the start of a lease to protect the landlord against potential damages. It provides a level of financial security in case the tenant fails to pay rent or causes damage beyond normal wear and tear. 

The primary purpose of security deposits in Delaware is to give landlords recourse if a tenant violates the lease agreement. Typical lease violations that a deposit could be used to cover include:

• Unpaid rent
• Damage to the unit beyond ordinary use
• Failure to clean the unit properly upon moving out
• Unpaid utility or service bills that were the tenant's responsibility

Security deposits in Delaware are governed by the state's Landlord-Tenant Code. Key provisions of Delaware law include:

• Limits on the maximum deposit amount a landlord can require
• Requiring deposits to be held in Delaware banks 
• Mandating return of deposits within 20 days after a tenant moves out
• Allowing deductions only for specific lease violations like property damage
• Providing penalties if landlords wrongly withhold deposit funds

Delaware strives to balance the interests of landlords and tenants when it comes to security deposits. The laws aim to give landlords reasonable protection while also ensuring tenants get their deposits refunded fairly after moving out.

Landlord's Obligations Relating to Security Deposits

Delaware landlords have several important legal obligations when it comes to handling security deposits:

Holding the Deposit in a Delaware Bank

Landlords in Delaware must hold security deposits in a federally insured financial institution physically located in the state. The deposits must be held in escrow, which means the funds cannot be comingled with the landlord's personal money or used for expenses outside of the rental property.

Returning the Deposit Within 20 Days

When a tenant moves out, Delaware law requires the landlord to return the security deposit within 20 days along with an itemized list of any deductions. This applies whether the tenant left voluntarily or was evicted.

If the landlord cannot complete repairs and determine deductions within 20 days, they still must return any undisputed portion of the deposit within the 20 day timeline.

Providing an Itemized List of Deductions

Along with returning the security deposit, landlords in Delaware must also provide tenants with a written list of any deductions for damages, unpaid rent, cleaning, or other charges. 

This itemized list should include the exact dollar amount deducted with a detailed explanation for each deduction. Any funds not deducted must be promptly returned to the tenant.

Tenant's Obligations Relating to Security Deposits

As the tenant, you have certain responsibilities when it comes to security deposits in Delaware. Here's what you need to know:

Paying the Security Deposit As Required

When signing your lease, you'll be required to pay a security deposit, usually equal to 1 month's rent. Be sure to pay this deposit in full and on time to avoid any issues. The deposit is meant to protect the landlord in case you cause damages or don't pay rent.  

Maintaining the Property 

During your tenancy, it's important to keep the rental unit in good condition and avoid damages beyond normal wear and tear. This will help ensure you get your full deposit back. Take care of any repairs promptly and keep the property clean.

Providing Proper Notice Before Moving Out

Give your landlord proper written notice before moving out, as required in your lease. The notice period is usually 1 month. This allows the landlord time to inspect the property and return your deposit. Failure to provide adequate notice may result in forfeiting part or all of your deposit.

Conduct a Move-Out Inspection

You have the right to request a joint move-out inspection with your landlord to identify any damages or issues. This protects you from being charged for pre-existing damages. Take photos and be present during inspection.

Following these tenant responsibilities will set you up for a smooth deposit return in Delaware. Let your landlord know of any issues and address concerns proactively. Maintain open communication throughout your tenancy.

Allowable Deductions from Security Deposits

Delaware landlords are permitted to deduct the following items from a tenant's security deposit:

Unpaid Rent

If a tenant fails to pay rent or moves out owing rent, the landlord can deduct unpaid rent from the security deposit. This includes using the deposit for any rent still owed for the remainder of the lease term if the tenant breaks the lease early.

Damage Beyond Normal Wear and Tear

Landlords can deduct from the deposit to repair or replace any damages to the rental property beyond normal wear and tear. This includes damages such as:

• Holes in walls
• Broken appliances 
• Stained or damaged carpets
• Missing fixtures
• Damage to doors and windows

Landlords cannot deduct for minor damage from normal use.

Unpaid Utility Bills

If the lease makes the tenant responsible for paying any utilities, the landlord can use the security deposit to settle any unpaid utility bills left behind by the tenant. This includes electric, gas, water/sewer, garbage pickup bills.

Prohibited Security Deposit Deductions

Delaware law prohibits landlords from deducting certain costs from a tenant's security deposit. The following are common prohibited deductions:

Normal Wear and Tear

Landlords cannot deduct costs related to normal wear and tear in a rental unit. Wear and tear refers to the expected decline in condition that occurs through standard occupancy and aging. For example, worn carpet, minor paint scuffs, or faucets and appliances working less effectively due to regular use. These should be considered part of owning and renting out a property.

Routine Cleaning and Maintenance  

Landlords are responsible for cleaning and maintenance as part of providing a livable rental. They cannot deduct basic cleaning costs or routine maintenance from the security deposit, such as:

• Vacuuming carpets
• Washing floors, windows, walls
• Dusting 
• Removing cobwebs
• Cutting lawn
• Snow removal
• Changing HVAC filters
• Replacing light bulbs

Tenants should still properly maintain the unit, but basic cleaning and maintenance for the next tenant is the landlord's responsibility.

Pre-Existing Damages

If there are damages that already existed when the tenant moved in, documented in a move-in inspection report, the landlord cannot deduct these from the deposit. Tenants are only responsible for damages they cause during their own tenancy.

Returning the Security Deposit

When a tenant moves out, they must provide their landlord with a forwarding address where the security deposit can be sent. This should be done preferably in writing. 

Under Delaware law, the landlord then has 20 calendar days after the tenant leaves to return the security deposit in full or provide an itemized list of any deductions along with the remaining balance.

If the landlord fails to return the deposit or provide a list of deductions within 20 days, the tenant can send a written demand for the return of their full deposit. If the landlord still does not comply within 20 days of receiving the demand, the tenant can file a lawsuit in small claims court to recover up to double the amount wrongfully withheld.

If the landlord provides an itemized list of deductions, the tenant has the right to contest any improper deductions in writing within 20 days of receiving it. For example, if the landlord deducts for normal wear and tear or pre-existing damages, the tenant should object in writing. The tenant can negotiate a resolution, or ultimately sue in small claims court for recovery of up to triple the amount wrongfully withheld if the deductions were made in bad faith.

It's important for tenants to properly document the condition of the unit when moving out. And landlords need to accurately account for any deductions from the security deposit and return the balance within 20 days to avoid disputes and potential liability.

Disputing Improper Security Deposit Deductions

If a tenant believes the landlord has wrongfully withheld all or part of the security deposit in Delaware, they have options for disputing the deductions. 

Written Objection Within 20 Days

Within 20 days after receiving an itemized list of deductions from the landlord, the tenant can send a written objection contesting the deductions. This puts the landlord on notice that the tenant disputes the amounts withheld.

The written objection should specify which deductions are being disputed and the reasons why the tenant believes they are improper or excessive. Supporting documentation can be included as well. 

Sending a written objection does not guarantee the disputed amount will be returned, but it starts a paper trail and shows the tenant acted promptly to contest the deductions.

Small Claims Court Option

If the dispute over deposit deductions is not resolved after the written objection, the tenant can file a claim in Delaware small claims court. The maximum amount that can be recovered in small claims court is $15,000.

The tenant will have to gather evidence and make their case before a judge that the landlord improperly withheld deposit funds. If the judge agrees, the landlord can be ordered to return the disputed portion of the deposit, plus court costs.

Recovering Up To 3x Deposit for Bad Faith 

Under Delaware law, if a landlord is found to have retained a security deposit in "bad faith," the tenant may recover up to three times the amount wrongfully withheld.

Bad faith means the landlord intentionally kept the deposit without a reasonable basis. If a judge determines the landlord acted in bad faith, the tenant may be awarded up to triple damages.

This provides a significant deterrent to landlords wrongfully keeping security deposits. Tenants should gather evidence if they believe the landlord exhibited bad faith. With clear documentation, recovering triple damages is possible.

Security Deposit Alternatives in Delaware

Rather than paying a traditional cash security deposit, tenants in Delaware have a couple options:

Surety Bonds

A surety bond is a contract in which a tenant pays a fee to a bonding company, which then promises to pay the landlord for any damages, unpaid rent, or other costs up to the bond amount. This protects the landlord while avoiding the need for the tenant to pay a large cash deposit.

The fee for a surety bond is usually 10-15% of the bond amount. For example, a $1000 surety bond would have a $100-$150 fee. This is paid only once.

Landlords in Delaware are required to accept surety bonds from an approved company in place of cash deposits. Tenants cannot be charged extra fees or denied housing for using a bond instead of a deposit.

Surety bonds can be a great option for renters who don't have the savings for a large security deposit. The key benefit is avoiding the upfront cost.

Renter's Insurance

Some landlords in Delaware may accept renter's insurance in lieu of a security deposit. This requires getting a policy that covers damages to the rental unit beyond normal wear and tear.

The landlord must be named as an additional interest on the policy. This gives them the ability to file claims against the insurance for property damages caused by the tenant.

Renter's insurance has benefits beyond just security deposits. It also protects the tenant's own possessions from theft or damage. When used instead of a deposit, the tenant avoids needing to pay a large amount upfront.

The insurance premiums are usually fairly affordable, often starting at $15-$30 per month. Deductibles are typically $500-$1000.

Tenants should make sure the landlord agrees to accept renter's insurance before signing a lease without a deposit. Get written confirmation in the lease agreement.

Special Circumstances

Abandonment or Eviction

If a tenant abandons the rental property or is evicted, the landlord still must follow the proper procedures for returning the security deposit. The landlord cannot simply keep the deposit without doing an inspection, providing notice, and returning any unused portion within 20 days.

If a tenant is evicted, the landlord can use the security deposit to pay for any rent owed or damages. The rest must be returned. For abandonment, the landlord must make reasonable efforts to locate the tenant to return the deposit before forfeiting it.

Sale of the Property  

If the rental property is sold, the buyer takes over responsibility for the tenant's security deposit. The seller must transfer the full security deposit amount to the buyer, who then returns it to the tenant under the usual procedures. Tenants should make sure to get written confirmation of the transfer.

Tenant Bankruptcy or Death

If a tenant files for bankruptcy, the security deposit becomes part of the bankruptcy estate. Landlords cannot withhold a deposit without court approval.

If a tenant dies, the landlord may need to return the security deposit to the deceased tenant's probated estate. Otherwise, they will need to comply with the lease terms and state law.

FAQ

Common security deposit questions

What can a landlord deduct from a security deposit in Delaware?

A landlord can deduct unpaid rent, damages beyond normal wear and tear, and any unpaid utility bills or other charges owed by the tenant. The deductions must be itemized.

What can't a landlord do with the security deposit in Delaware?

A landlord cannot deduct for normal wear and tear, routine cleaning and maintenance, or pre-existing damages that were there before the tenant moved in. The full deposit must be returned if the tenant leaves the unit in the same condition as when they moved in, minus normal wear and tear.

How long does it take to get a security deposit back in Delaware?

Delaware landlords have 20 days after the end of the lease to return the security deposit to the tenant. If any deductions are taken, an itemized list must be provided.

When can a tenant withhold rent in Delaware?

Tenants can only withhold rent in Delaware if a landlord fails to provide essential services like heat, water, electricity, or plumbing. Withholding rent for other reasons can lead to eviction.

What happens if a landlord wrongfully keeps a security deposit in Delaware?

If a landlord wrongfully keeps a security deposit in bad faith in Delaware, the tenant can take them to small claims court and recover up to 3 times the amount wrongfully withheld.