Nebraska Security Deposit Laws in 2024

What is Considered a Security Deposit in Nebraska?

A security deposit in Nebraska refers to any money paid by a tenant to a landlord prior to moving into a rental unit. It serves as collateral to cover any potential damages that may occur during the tenant's occupancy. 

Typically, security deposits are equal to the first month's rent. However, Nebraska law does not limit security deposit amounts, so a landlord can legally charge more if agreed upon in the lease. The security deposit belongs to the tenant, but is held by the landlord in a separate escrow account for the duration of the tenancy.

By requiring an upfront security deposit, landlords aim to protect themselves from incurring costs related to property damage, unpaid rent, cleaning and repairs after move-out. Tenants may view high security deposits as a barrier to renting, but they also offer incentive for tenants to properly maintain the unit and avoid excessive damages.

Maximum Security Deposit Amount in Nebraska

There is no Nebraska state law limiting the maximum amount a landlord can charge for a security deposit. Typically, landlords in Nebraska charge the equivalent of 1 month's rent for the security deposit. However, some landlords may require a larger security deposit amount, especially for tenants with pets, a history of damage, or low credit. 

While there is no set limit, landlords in Nebraska cannot charge an unreasonably high security deposit. Requiring more than 2 month's rent for a deposit could be considered unreasonable, absent special circumstances. Tenants facing an unusually high security deposit request may want to try negotiating with the landlord or look for rental units with more reasonable deposit policies. If the landlord will not budge on an extremely high deposit amount, the tenant can file a complaint with the state Attorney General's office.

Interest Payments on Security Deposits in Nebraska

Landlords in Nebraska are required to pay interest on security deposits annually. The interest rate must be equal to the average passbook savings rate. This rate is determined based on the rates offered by commercial banks in Nebraska.

The accrued interest on the security deposit can either be paid directly to the tenant, or it can be applied towards any damages or unpaid rent. If there are no damages or unpaid rent, the full amount of interest must be given to the tenant. 

Interest begins accruing as soon as the tenant pays the security deposit, up until the deposit is returned. Interest is compounded annually and must be paid out no later than the anniversary of when the deposit was given.

For example, if a tenant provides a security deposit of $1000 on January 1st, 2020, the landlord must pay the accrued interest by January 1st, 2021. If the tenant moves out on July 1st, 2021, any interest accrued in those 6 months would need to be paid out within 14 days along with the return of the deposit.

Requiring interest payments on security deposits provides some benefit to tenants, as otherwise landlords would essentially have an interest-free loan for the deposit amount throughout the lease term. The interest helps offset some of the costs for tenants when providing a deposit.

Allowable Deductions from Security Deposits in Nebraska

Landlords in Nebraska are permitted to deduct the following from a tenant's security deposit:

Unpaid rent

If a tenant fails to pay rent as required by the lease, the landlord can use the security deposit to cover the unpaid amount. This includes rent 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 unit beyond normal wear and tear. This could include stains, holes in walls, broken appliances, or any other damage that exceeds normal deterioration from living in the unit. The landlord must prove the tenant is responsible.  

Costs of cleaning/repairing apartment after move out

Landlords can use the security deposit to cover any cleaning or repairs needed to return the unit to the same condition as when the tenant moved in. This includes carpet cleaning, repainting, debris removal, and any other cleaning or repair costs incurred after move out.

Late fees/other fees agreed to in lease

If the tenant accrues any late fees, returned check fees, or other fees mentioned in the lease agreement, the landlord can deduct these from the security deposit if unpaid by the tenant. Both parties must consent to these deductions in the lease.

Normal wear and tear is expected deterioration from living in the unit, such as minor carpet stains and small scuffs on walls. Landlords cannot deduct for normal wear and tear or pre-existing conditions. The burden of proof is on the landlord to show the tenant caused the damage claimed.

Returning Security Deposits in Nebraska

In Nebraska, landlords must return a tenant's security deposit within 14 days after the tenant has moved out and the lease is terminated. The landlord must also provide the tenant with a written itemized statement of any deductions taken from the deposit.

The itemized statement should clearly list the reasons for each deduction, along with dollar amounts and receipts if applicable. Reasons could include unpaid rent, damages beyond normal wear and tear, and costs of cleaning or repairing the unit after the tenant moved out.

If the landlord fails to return the deposit and itemized statement within 14 days, the tenant can seek to recover up to twice the amount wrongfully withheld.

If a tenant does not claim their security deposit within 2 years after moving out, the unclaimed funds must be turned over to the State Treasurer's Office as unclaimed property. The tenant would then need to file a claim with the state to get their deposit back.

So in summary, Nebraska landlords have 14 days after a tenant moves out to return the security deposit and itemized deductions. Unclaimed deposits after 2 years must be given to the state. Following proper procedures on security deposit returns can help avoid penalties and legal issues.

Pet Deposits in Nebraska 

Landlords in Nebraska have the right to charge an additional deposit for tenants with pets, known as a pet deposit. Unlike security deposits, there is no state law limiting the maximum amount a landlord can charge for a pet deposit in Nebraska. Landlords are able to determine the pet deposit amount based on factors like the size of the pet, potential risks of damage, and additional wear and tear expected. 

Pet deposits are subject to the same state laws and requirements as regular security deposits in Nebraska. This means landlords must place pet deposits in a separate escrow account, pay interest annually, provide a written itemized deduction statement, and return any unused portion within 14 days after the tenant moves out. Pet deposits can only be used to cover damages specifically caused by the pet during the tenancy, such as carpet stains or scratches on doors. Normal wear and tear does not apply to pet deposits.

Tenants should make sure any pet deposit and associated terms are included in the written lease agreement. Pet owners may want to take extra steps to protect their deposit, such as professional carpet cleaning upon move out. If a landlord wrongfully retains a pet deposit in Nebraska, the tenant has the same legal recourse as with a security deposit, including recovery through the courts if necessary.

Security Deposits for Commercial Leases in Nebraska

The security deposit laws outlined in this guide apply specifically to residential rental agreements in Nebraska. Commercial leases are treated differently under Nebraska law.

Landlords of commercial properties are not required to follow the residential security deposit rules on amounts, interest, deductions, and return timelines. The handling of security deposits for commercial leases in Nebraska is dictated by the terms outlined in the individual rental agreement between the tenant and landlord.

It is common for commercial lease agreements to specify details on the deposit amount, allowable uses, accrued interest, deductions, and procedures for return. Commercial tenants should carefully review the security deposit terms in their lease and negotiate if needed before signing. 

Unlike residential leases, there are no statutory limits on security deposit amounts or required interest payments that automatically apply to commercial leases in Nebraska. The security deposit terms are fully negotiable based on the agreement between the landlord and tenant.

If the commercial lease does not provide adequate details on the handling of the tenant's security deposit, it is advisable to have an addendum added to clarify the specific deposit policies and procedures agreed upon by both parties. This helps prevent any misunderstandings or disputes regarding deductions, interest, and return timelines when the lease ends.

Using the Deposit During the Lease Term in Nebraska

In Nebraska, landlords cannot deduct damages from the security deposit during the term of the lease. The security deposit is intended to cover damages identified at the end of the lease when the tenant moves out. 

However, there are some exceptions where a landlord may use part of the security deposit during the lease term:

Abandonment

If the tenant abandons the property before the end of the lease, the landlord can use the security deposit to cover unpaid rent or damages.

Nonpayment of rent

If the tenant fails to pay rent, the landlord can use the security deposit to cover unpaid rent after providing proper notice. 

Agreement

The landlord and tenant may mutually agree in writing to apply part of the security deposit to cover unpaid rent or damages during the lease. This should be documented in a lease addendum or amendment.

Outside of these exceptions, deducting from the security deposit during the lease term goes against Nebraska law. The full security deposit amount must remain available until lease termination when the landlord can properly assess damages and cleaning costs.

Penalties for Improper Security Deposit Handling in Nebraska

If a landlord improperly withholds all or part of a security deposit in Nebraska, the tenant has the right to recover up to twice the amount of the deposit, in addition to the full deposit amount wrongfully withheld. 

For example, if a tenant paid a $1000 security deposit and the landlord wrongfully keeps $500 of it, the tenant can recover the $500 plus up to $1000 in penalties, for a total of $1500.

If the tenant takes legal action over an improperly withheld deposit, the landlord will also be liable for the tenant's court costs and reasonable attorney fees related to recovering the deposit. This provides further motivation for landlords to properly handle security deposits and not unlawfully deduct damages from them.

Tenants should keep thorough move-in and move-out documentation and give proper notice when vacating to avoid any disputes over deposit returns. But when a landlord clearly violates Nebraska law regarding security deposits, tenants have strong remedies to recover their full deposit plus penalties.

Frequently Asked Questions

What is the maximum amount a landlord can charge for a security deposit in Nebraska?

There is no state law limiting the maximum amount a landlord in Nebraska can charge for a security deposit. Typically, landlords charge 1 month's rent, but they can legally require more if they wish. The deposit amount should be reasonable based on factors like rent, pet ownership, and tenant history.

Can a landlord in Nebraska charge a pet deposit in addition to the security deposit?

Yes, Nebraska landlords can charge an additional deposit for tenants with pets, on top of the standard security deposit. There is no limit in state law on pet deposit amounts.

Does a landlord in Nebraska have to pay interest on security deposits? 

Yes. Nebraska law requires landlords to pay accrued interest on security deposits annually. The interest rate is set at the average passbook savings rate. Interest can be paid directly to the tenant or applied to rent/damages.

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

Allowable deductions include unpaid rent, damage beyond normal wear and tear, costs of cleaning/repair after move out, late fees or other charges agreed to in the lease. Landlords cannot deduct for normal cleaning or redecorating.

What is the time limit for a landlord in Nebraska to return a security deposit?

Nebraska landlords have 14 days after the lease ends and the property is vacated to return the security deposit and itemized deductions. Unclaimed deposits must be turned over to the State Treasurer after 2 years.

Can a landlord in Nebraska require more than one month's rent for a security deposit?

Yes, since there is no legal limit on deposit amounts in Nebraska, landlords can require more than 1 month's rent if they wish. Typically up to 2 month's rent may be charged for tenants with poor credit or rental history.

Do security deposit laws in Nebraska apply to commercial leases?

No, the residential security deposit laws do not apply to commercial leases in Nebraska. Deposit terms should be specified in the commercial lease agreement.

Can a landlord in Nebraska use the security deposit for unpaid rent or damages during the lease? 

No, landlords cannot deduct from the deposit during the lease term, except in cases of abandonment, nonpayment of rent, or with the tenant's agreement. Damages must wait until move out.

Is there a limit on how much a landlord in Nebraska can charge for a pet deposit?

No, Nebraska law does not limit the amount a landlord can charge for a pet deposit when allowing pets. Landlords can charge 1 month's rent or more for the pet deposit if they wish.

What happens if a landlord in Nebraska does not return the security deposit in the required time?

If a landlord fails to return the deposit or provide an itemized statement within 14 days, the tenant can recover up to 2x the deposit amount plus court costs and attorney fees.