New Hampshire Security Deposit Laws in 2024

Overview of New Hampshire Security Deposit Law

Security deposits are funds paid by a tenant at the start of a lease to provide financial protection for the landlord if the tenant violates the terms of the lease agreement. Landlords in New Hampshire are allowed to collect security deposits from tenants, but the state has laws governing the handling and return of these deposits to protect renters. 

The purpose of security deposits in New Hampshire is to cover any unpaid rent, property damage beyond normal wear and tear, and other financial losses incurred by the landlord related to a tenancy. It is not intended to be an advance payment of rent or a penalty.

New Hampshire RSA 540-A regulates security deposits for all residential rental units except owner-occupied buildings with 5 or fewer units. This law outlines the rights and responsibilities of landlords and tenants when it comes to security deposits in the state.

Tenants have the right to a full refund of their security deposit plus interest when they fulfill the terms of the lease, leave the unit in the same condition minus normal wear and tear, and return the keys. Landlords must return deposits within 30 days of a tenant moving out or provide written documentation of any deductions.

Landlords have the responsibility to hold security deposits in a separate escrow account, provide receipts, conduct walk-through inspections, make lawful deductions, and return any unused balance to the tenant. Failure to follow the security deposit law can result in penalties for landlords.

Understanding the legal requirements around security deposits in New Hampshire ensures that the rights of both landlords and tenants are protected.

Security Deposit Limits

In New Hampshire, landlords are limited in how much they can collect for a security deposit. The standard security deposit limit is equal to one month's rent for most rental properties. 

For example, if the monthly rent is $1,000, the maximum security deposit the landlord can require is $1,000. This applies to apartments, duplexes, condos and other common rental units.

However, there is no limit on security deposit amounts for single family home rentals in New Hampshire. Landlords who rent out entire houses are exempt from the one month's rent cap on deposits. They can charge any amount they deem necessary as a security deposit for these types of rentals.

The difference highlights how New Hampshire security deposit laws treat single family homes differently than multi-unit properties. While apartments and the like are subject to deposit limits, landlords have more flexibility when renting out whole houses. As long as the rental is for the entire home, there are no legal limits on the security deposit amount in New Hampshire.

Storing Security Deposits

Landlords in New Hampshire are required to keep security deposits in a separate escrow account and cannot commingle deposits with their own funds. The security deposit must be deposited in an account within New Hampshire at a bank, savings and loan association, or credit union. 

The account must earn interest at the rate of 5% per year or more. Interest accrued from security deposits belongs to the tenant. Landlords cannot benefit from the interest earned on tenant security deposits.

The escrow account containing security deposits must be separate from the landlord's personal account or any other accounts. Funds from security deposits cannot be mixed with the landlord's money or used for any purposes other than refunding the deposit at the end of tenancy.

Commingling security deposits with a landlord's personal funds or other accounts is illegal in New Hampshire. Keeping the deposit in a separate escrow account is crucial to comply with state laws and maintain proper accounting of each tenant's security deposit.

Security Deposit Receipts

When a landlord accepts a security deposit from a tenant in New Hampshire, they must provide the tenant with a receipt within 30 days of receiving the deposit. This receipt must include the following information:

• The amount of the security deposit
• The name and location of the bank where the security deposit is being held
• The account number where the security deposit is being held
• The current interest rate that the security deposit is earning

Providing this receipt is an important part of complying with New Hampshire security deposit law. It ensures that tenants have documentation showing that their deposit is being held properly. The receipt also allows tenants to verify that their deposit is accruing interest at the legally required rate. 

Landlords who fail to provide a proper receipt with all of the required details within 30 days may be subject to penalties. Tenants have the right to demand a receipt at any time during the tenancy as well. Having this documentation available can help avoid potential disputes over security deposits when the tenancy ends.

Allowable Deductions

Landlords in New Hampshire are permitted to deduct money from a tenant's security deposit for a limited number of reasons, including:

Unpaid Rent

If a tenant fails to pay rent or moves out before the end of the lease term, the landlord can use the security deposit to cover any unpaid rent. This includes rent owed for the remainder of the lease if the tenant breaks the lease early.

Damages Beyond Normal Wear and Tear

Landlords can deduct from the security deposit to repair or replace any damages to the property beyond normal wear and tear. This could include stains, holes in walls, broken appliances, or any other damage that exceeds the normal aging and use of the rental.

Cleaning Costs  

If a tenant leaves the property unreasonably dirty, the landlord can deduct cleaning fees from the deposit to have the unit professionally cleaned. This only applies if the unit is left dirtier than the condition it was in when the tenant moved in, accounting for normal cleanliness deterioration over time.

The landlord cannot make deductions for normal wear and tear or pre-existing conditions. Nor can the landlord deduct for damage that is considered negligence on their part, like an appliance breaking due to old age.

Inspections

Tenants in New Hampshire have a right to an initial and a final inspection of the rental unit when moving in and moving out. These inspections allow the tenant to thoroughly document the condition of the unit at the start and end of the tenancy. 

The initial inspection should take place when the tenant first moves in, before any belongings or furniture are moved in. The landlord and tenant should walk through the unit together, checking for any existing damage, wear and tear, or maintenance issues. They should take notes and photographs documenting the condition of all rooms, appliances, floors, walls, etc. Any defects should be noted in writing and both parties should sign the inspection report.

The final inspection should take place after the tenant has removed all their belongings and cleaned the apartment. Again, the landlord and tenant should walk through the unit, comparing its current state to the initial inspection. The final report should note any new damage that occurred during the tenancy, beyond normal wear and tear. If the unit is unreasonably dirty, excessive cleaning costs may also be deducted. 

Having documentation from the initial and final inspections protects both landlords and tenants. Tenants can prove that certain damages were pre-existing, while landlords can demonstrate issues caused by the tenant. In the case of a security deposit dispute, the inspection reports provide crucial evidence for both sides.

Returning the Deposit

Landlords in New Hampshire have 30 days after the tenancy ends to return a tenant's security deposit. This includes providing an itemized list of any deductions taken from the deposit, along with a check for the remaining balance. 

The 30 day timeline begins once the rental is vacant and possession of the unit has been returned to the landlord. This means keys have been turned in, belongings removed, and the tenants no longer occupy the apartment or home.

Within the 30 days, the landlord must send the tenant their security deposit balance by first class mail, along with an itemized list of deductions. It is advisable for landlords to send this by certified mail and request a return receipt, to have proof it was delivered. 

If any amount is deducted, the landlord must provide a written list explaining in detail the reasons for each deduction. For example, they may list dollar amounts taken out for unpaid rent, damages beyond normal wear and tear, the cost of cleaning or repairs, unpaid utilities, or removal of abandoned property. 

Tenants should review the itemized deduction list closely. Landlords cannot legally make deductions for normal wear and tear or for cleaning and repairs needed to prepare the unit for the next tenant. Only damages caused by the tenant can be deducted.

If tenants dispute any of the deductions or believe too much was withheld, they can contact the landlord to contest it. The landlord may ask for documentation such as photos, invoices, or cost estimates. Ultimately if the tenant disagrees, they can file a claim in small claims court against the landlord to recover the disputed amount.

Unclaimed Deposits

If a tenant moves out and fails to provide a forwarding address, the landlord must make reasonable efforts to locate the tenant to return the security deposit. This may include sending a letter to the tenant's last known address, contacting references on the rental application, or checking public records.

If the landlord is still unable to locate the tenant after a good faith effort, unclaimed security deposits must be turned over to the state after 5 years. The tenant can recover their security deposit by filing a claim with the state treasurer's office. 

The landlord should keep documentation of their efforts to contact the tenant in case any dispute arises. As long as the landlord demonstrates reasonable attempts were made, they will not be liable for unclaimed deposits turned over to the state after 5 years.

Exemptions

Single family homes are exempt from many of New Hampshire's security deposit laws and regulations. Landlords who rent out single family homes, as opposed to multi-family buildings, do not need to follow the rules about security deposit limits, escrow accounts, receipts, and more.

Specifically, the laws in RSA 540-A that limit security deposits to one month's rent, require deposits to be held in interest bearing accounts, and mandate receipts and refunds within 30 days do not apply to single family home rentals. 

Landlords of single family rentals in New Hampshire can charge any amount for a security deposit with no maximum limit. They also don't have to place the deposit in a separate banking account and pay interest. Receipts and refunding timelines are at the individual landlord's discretion.

The exemption for single family rentals applies because these landlords are typically smaller in scale. The laws aim to regulate the practices of larger, professional landlords. There are far fewer rules and regulations imposed on landlords who rent out a single family home or just a small number of units.

However, landlords of single family rentals do still need to follow basic practices like providing a written lease and giving proper notice for entry. They also cannot make unlawful deductions from security deposits that all landlords are subject to, such as damages that exist at the outset of tenancy. But overall, single family rental landlords have more flexibility and discretion when it comes to security deposits.

Key Takeaways

Security deposits can be a source of confusion and disputes for landlords and tenants in New Hampshire. Here are the key takeaways to keep in mind:

• The maximum security deposit in New Hampshire is one month's rent, except for single family home rentals which have no limit.
• Landlords must keep security deposits in a separate escrow account and provide tenants with a receipt including banking details. 
• Tenants have a right to initial and final inspections to document the condition of the rental.
• Allowable deductions include unpaid rent, damages beyond normal wear and tear, and cleaning costs if the unit is left unreasonably dirty.
• Landlords have 30 days after the tenancy ends to return the deposit along with an itemized list of deductions.
• Unclaimed deposits go to the state after 5 years if the landlord cannot locate the tenant.
• Single family home rentals are exempt from security deposit limits, accounts, and other requirements.

To learn more, landlords and tenants can consult the New Hampshire Attorney General's guide on security deposits or speak to a lawyer regarding the specifics of their situation. Understanding the laws and properly handling deposits can help avoid disputes down the road.

Frequently Asked Questions

Can a landlord ask for first, last, and security deposit in New Hampshire?

Yes, in New Hampshire, landlords can legally request the first month's rent, last month's rent, and a security deposit at the time of lease signing. However, the total amount collected as a security deposit cannot exceed one month's rent or $100, whichever is greater.

What is the interest rate on security deposits in New Hampshire?

In New Hampshire, landlords are required to place security deposits exceeding $100 or one month's rent (whichever is less) in an account that accrues interest at a rate comparable to similar deposits held by financial institutions in the state. The interest must be paid to the tenant annually.

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

In Maine, landlords can deduct from a security deposit for unpaid rent, damage beyond normal wear and tear, unpaid utility charges, and necessary cleaning to return the unit to its original condition at the start of tenancy. They must provide an itemized list of deductions within 30 days after the tenant vacates.

What is a security deposit defined as in New Hampshire?

In New Hampshire, a security deposit is defined as any money given to the landlord, other than a rental application fee or an advance payment of the first month's rent, intended as security against damage to the premises, unpaid rent, or expenses incurred due to a breach of the lease.

What are the rental laws in New Hampshire?

New Hampshire rental laws cover various aspects of the landlord-tenant relationship, including lease agreements, security deposits, tenant rights to privacy and habitable housing, and eviction procedures. These laws are designed to protect both landlords and tenants and ensure fair practices in the rental market.