Arkansas

Security Deposit Amount

A landlord may not demand or receive a security deposit, however denominated, in an amount or value in excess of two months' periodic rent.

This does not apply to dwelling units owned by an individual, if the individual, his or her spouse and minor children, and any and all partnerships, corporations, or other legal entities formed for the purpose of renting dwelling units and of which they are officers, owners, or majority shareholders own, or collectively own, five or fewer dwelling units (unless management is performed by a 3rd party for a fee).

Options for Holding

Landlords in Arkansas are not required to hold security deposits in a separate account or trust fund. They may keep the deposit with their own funds, but must return it as required by law.

Notification Requirements

There are no specific notification requirements in Arkansas regarding the location or manner of holding the security deposit.

Payment of Interest Earned

Arkansas law does not require landlords to pay interest on security deposits, regardless of the length of the tenancy or the amount of the deposit.

Timeline for Returning

Landlords must return the security deposit, along with an itemized list of deductions, within 30 days after the tenant vacates the property.

Claims Process

When returning the security deposit, landlords must provide a detailed, itemized statement of any deductions made and send the remaining balance of the deposit with the itemized statement to the tenant’s forwarding address or last known address.

If the tenant disputes the deductions, they may file an action in small claims court but are encouraged to first attempt to resolve the dispute directly with the landlord.

Landlords in Arkansas can deduct from the security deposit for:

• Unpaid rent.
• Damage to the property beyond normal wear and tear.
• Cleaning costs necessary to return the property to its original condition.
• Any other charges specified in the lease agreement, provided they are reasonable and documented.

If a landlord fails to return the deposit or provide an itemized list of deductions within the required 30-day period, the tenant may sue the landlord for the deposit amount. The tenant may also be entitled to recover attorney’s fees and court costs if the court rules in their favor.

Abandonment: If the tenant abandons the property, the landlord may keep the deposit for unpaid rent and damages but must still follow the procedure for returning any remaining balance.

Sale of Property: If the property is sold, the landlord must transfer the security deposit to the new owner, who then becomes responsible for returning it to the tenant.