Facts about Arkansas Security Deposits
If you are a landlord in Arkansas, you may be required to follow certain procedures when handling the security deposits of your tenants. First, you may not require a security deposit totaling more than two (2) months rent. That means if you charge $500 in rent each month, you may not require more than $1,000 as a security deposit. After the tenancy ends and the tenant has moved out, you must return any property or money, including the security deposit, to the tenant within 60 days.
If you wish to use the security deposit to cover the expenses of any damages the tenant has caused, or if any rent remains unpaid, the law requires you provide notice to the tenant before keeping the security deposit to cover those expenses. You must account for all of the security deposit you keep by making a written list detailing the repairs and damages that the tenant caused. Any amount of the security deposit that is not a documented expense must be returned to the tenant.
You must send the notice and payment to the last known address of the tenant. If the letter containing the notice and payment is returned, you still must make a reasonable effort to find the tenant, such as by phone or email. Once you mail the letter, however, and 180 days have passed without any sort of response, you may keep the payment only if you are still unable to locate the tenant.
Failing to provide the tenant with his notice and security deposit will subject you to penalties. If you fail to provide the tenant with a list of expenses the security deposit will be applied against, or fail to return the security deposit, the tenant may receive double the amount of the security deposit in addition to any other property or money belonging to the tenant and other costs the tenant incurred while waiting for the notice required by Arkansas law. This means that if the tenant paid $1,000 for a security deposit, she could receive $2,000 if you fail to comply with the law. Additionally, if the tenant has incurred any fees, penalties, or other costs while waiting for the return of the security deposit, you may be liable for those as well. If you are unable to return the list of expenses or the security deposit within the 60 days because of a dispute between you and the tenant regarding the amount the tenant may receive from the security deposit, you won’t be required to return double the amount of security deposit – but will be required to return the portion that did not go the expenses incurred as a result of the tenant.
Certain landlords are exempt from these requirements, but only those who, as individuals, own five or fewer rental properties and who do not use other individuals or corporations to manage the property in some way. For those who are covered – remember that a little bit of documentation will go a long way and protect you from losing out on the expenses in maintaining your rental properties.