Conflict can arise if your knowledge of the Alabama security deposit laws is limited as a landlord. These laws are contained within Alabama's landlord-tenant laws. Being aware of your rights ensures you’ll be paid for property damages your tenant may cause in your Alabama rental, for example.
Alternatively, you’ll also understand the legally acceptable timeframe to return the tenant’s security deposit. You might risk a lawsuit and face financial penalties otherwise.
For a landlord, the simple act of asking for a security deposit provides numerous advantages. It can be used to:
- Pay for cleaning fees. Part of the tenant’s responsibility is to turn over the rental in the same condition it was when they moved in. The rental unit must be reasonably clean. However, some do leave the rental untidy when they move out. Landlords can deduct the cleaning costs from the security deposit if the rental is extremely unclean for the next tenant
- Pay for rental income loss. Some tenants can break the lease early or leave the property without informing the landlord beforehand. This can result in a rental income loss. The security deposit can be used to cover this loss so the landlord will be compensated despite the tenant’s abandonment
- Pay for repair expenses due to excessive property damage. Apart from wear and tear, some damages occur because of the tenant's negligence. Damage can be things like broken windows, holes in the walls and missing door handles. The Alabama landlord is entitled to pay off the repair or replacement costs through the tenant’s security deposit.
Now that the advantages have been covered, the following are the legal requirements of security deposit laws in Alabama.
A Guide to Alabama’s Security Deposit Law
1. Alabama Security Deposit Limit
Different states have set limits on the amount a landlord is permitted to collect for the security deposit. In Alabama, the maximum amount is fixed at one month’s rent and cannot exceed that amount.
However, this excludes additional deposits for pets or additional housing improvements. The latter can be due to necessary adjustments such as additional amenities for tenants with physical disabilities.
A landlord can also ask for additional charges depending on tenant activities that expose the landlord to more liability risks.
The security deposit can be an upfront cost that a landlord can collect from a renter, aside from other deposit fees.
2. Non-refundable Fees
There is no statute regarding non-refundable fees. This means there’s no mandate against charging for non-refundable pet fees or cleaning fees.
3. Storing a Tenant’s Deposit in Alabama
In other states, laws are specific on storing a tenant’s security deposit. They may require landlords to store the deposit in an interest-bearing account, for instance.
However, in Alabama, there is no statute requiring landlords to pay interest on security deposits. Landlords can also choose to pay interest if they volunteer to do so.
4. Written Notice after Security Deposit Receipt
Landlords in Alabama are not mandated to provide written notice of receipt upon receiving the tenant’s security deposit.
5. Reasons to Withhold a Tenant’s Security Deposit in Alabama
There are situations where landlords are allowed to keep the entire amount or a partial amount of the security deposit. In Alabama, the common reasons include:
- Spending for property repairs beyond normal wear and tear
- Replacement of damaged items such as furniture or appliances due to tenant negligence
- Paying for cleaners when a unit is unclean and unlivable
- Covering unpaid rent, such as the case of an eviction
Alabama landlords cannot keep any portion of the security deposit when there are existing conditions prior to the tenant’s move in, nor can they withold it for discriminatory reasons, as stated in the Fair Housing Act.
6. A Walk-Through Inspection
In Alabama, it’s not required for the landlord to conduct a walk-through inspection, unlike in other states.
7. Security Deposit Refund in Alabama
All landlords are obligated to return their tenants’ security deposits within a given period. In Alabama, landlords are provided with 60 days to refund the deposit once the lease terminates and the landlord has repossessed the property.
Landlords are also tasked to send a written list if deductions apply. It must be sent with the partial refund. This list must be itemized, specific and detailed for the tenant to know the estimated repair costs.
Should the landlord fail to meet the 60 day period deadline, they need to pay the tenant twice the original deposit. Moreover, there can be additional damages as rewarded by the court, on top of the doubled security deposit amount.
Alabama landlords are obliged to refund the security deposit using first-class mail. They must send it using the address the tenant had provided in writing. If the recorded address is not valid, they must send it to the last known address. If this does not exist, then it’s sent to the tenant using the rental property address.
If 90 days have passed and the tenant is still unable to claim the deposit or the check is not encashed, then forfeiture happens. It’s the tenant’s responsibility to always leave a valid forwarding address to the landlord to receive a security deposit refund.
8. Change in Property Ownership
When an Alabama landlord sells off the rental property, the new buyer/owner is responsible for all the tenants’ security deposit refunds. The new owner is liable to return the deposits and must ensure that a proper transfer is done.
Security deposit laws in Alabama are necessary for landlords to understand in order to protect themselves legally and from financial losses. There are many nuances to these requirements as well as time constraints to be followed. However, asking for a security deposit is ultimately in your best interest.
Reminder: this blog should not be used as a substitute for legal advice from a licensed attorney in your state. Laws frequently change, and this post might not be updated at the time of your reading.
Please contact us for any questions you have in regards to this content or any other aspect of your property management needs.