Kentucky Security Deposit Laws in 2024

Overview of Kentucky Security Deposit Laws

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 lease terms or causes damage. Kentucky law regulates security deposits to ensure fair practices. 

The key provisions landlords and tenants should know include:

  • Landlords can charge up to 1 month's rent for an unfurnished unit, or 2 month's rent for a furnished unit, as a security deposit.
  • Deposits must be held in a separate escrow account.
  • Landlords have 30 days after lease termination to return deposits, with an itemized statement of any deductions. 
  • Tenants can recover up to 2x the deposit amount if it is wrongfully withheld.

Recent changes that took effect in 2024 include:

  • Landlords must provide photographic evidence and repair estimates for any deposit deductions.
  • Non-refundable fees are now limited to 25% of 1 month's rent.  
  • The deposit return deadline was reduced from 45 days to 30 days after lease end.

These updates provide more protection for renters regarding their security deposits in Kentucky.

What is a Security Deposit?

A security deposit is a sum of money paid by a tenant at the start of a lease to protect the landlord against potential damages. It acts as a form of insurance for the landlord in case the tenant leaves the unit damaged or fails to pay rent. 

The security deposit is different from last month's rent. The last month's rent simply prepays for the final month of occupancy, while the security deposit is held separately by the landlord and can only be used for specific reasons allowed by Kentucky law.

In Kentucky, there are no legal limits on security deposit amounts for unfurnished units. Landlords typically ask for 1-2 months' rent as a security deposit for unfurnished apartments, and up to 6 months for furnished units. The average security deposit amount in Kentucky is around $750 for an unfurnished apartment. However, landlords can require larger deposits if agreed upon in the lease. Tenants should be prepared for a deposit equal to about 1 month's rent when apartment hunting in Kentucky.

Key Provisions of Kentucky Security Deposit Laws

Kentucky law places certain limits and requirements on security deposits for residential rental properties. Here are some of the key provisions tenants and landlords should understand:

Maximum Allowable Deposit Amount

Kentucky does not place a maximum limit on the total dollar amount a landlord can collect for a security deposit. However, the deposit amount must be reasonable and not impose an undue burden on the tenant. Most landlords in Kentucky charge 1-2 months' rent.

Requirements for Holding and Returning Deposits 

  • Landlords must hold security deposits in a separate escrow account and cannot mix deposits with their own funds. 
  • Deposits must be held in an interest-bearing account.
  • Interest earned on deposits belongs to the tenant.
  • Landlords have 30 days after lease termination to return deposits and any accrued interest, if the tenant provided a forwarding address.
  • If any deductions are taken, the landlord must provide an itemized statement and receipts within the 30 day period.
  • Tenants should conduct a walkthrough inspection with the landlord before moving out.

Permitted and Prohibited Deductions

Kentucky law allows landlords to deduct from the deposit for:

  • Unpaid rent
  • Damage caused by the tenant beyond normal wear and tear 
  • Breach of the lease agreement
  • Pet damage and fees

Landlords cannot deduct for:

  • Routine cleaning and maintenance
  • Normal wear and tear
  • Pre-existing conditions noted on the move-in inspection 

If the landlord makes prohibited deductions, the tenant can recover up to 2x the amount deducted.

Changes to Laws in 2024

In 2024, Kentucky passed several updates to its security deposit laws, bringing new requirements for landlords and tighter protections for tenants. Here are the key changes that both parties should be aware of:

New Documentation Requirements

The updated laws now require landlords to provide tenants with documentation of any deductions taken from the security deposit. This documentation should include:

  • A written description of the damages/costs being deducted
  • Copies of any invoices or repair estimates for fixing claimed damages
  • Photographs or videos showing the damage 

Landlords must deliver this documentation to the tenant when returning any remaining deposit balance. These new requirements help tenants verify that any deductions were valid and allowed under the law.

Limits on Non-Refundable Fees 

Kentucky now prohibits landlords from charging any non-refundable fees at the beginning of a lease, with the exception of pet deposits. Fees for cleaning, repairs, or redecorating that are advertised as "non-refundable" are no longer allowed. Tenants have the right to dispute and potentially recover these types of fees.

Tighter Deadlines for Returning Deposits

The updated laws shorten the deadline for landlords to return security deposits after a tenant moves out. Deposits must now be returned within 30 days of the lease termination, reduced from the previous 45 days. After 30 days, tenants can recover the full deposit amount even if there were legitimate deductions. This encourages prompt action by landlords.

These 2024 updates provide stronger protections around security deposits for Kentucky renters. Both landlords and tenants should understand the changes and how they impact end-of-lease procedures. Reach out to legal counsel with any questions.

Tips for Landlords

As a landlord in Kentucky, following best practices when handling security deposits can help avoid penalties and disputes down the road. Here are some tips:

Maintain Accurate Records

Keep detailed records of the move-in and move-out inspections, including written lists of existing damages and photographs. Provide the tenant with a copy of the move-in inspection report and have them sign it. When tenants move out, conduct a walkthrough, note any damages in writing, and provide tenants a copy.

Hold the Deposit Separately 

Landlords in Kentucky are required to keep security deposits in a separate escrow account and not mix the funds with personal money. Deposits should be held at a bank, credit union, or recognized escrow company.

Return Deposits Timely

Within 30 days after the tenant moves out, return the deposit with an itemized list of any deductions. Failure to meet this deadline can lead to penalties of double the amount wrongfully withheld. Send any deductions along with copies of invoices and receipts.

Limit Deductions 

Only deduct for actual damages caused by the tenant beyond normal wear and tear. Don't make deductions for pre-existing conditions or normal cleaning/repairs needed between tenants. Consult Kentucky statutes to determine what is permitted.

Communicate Clearly

Maintain open communication with tenants about the status of their deposit. Notify them of your intention to make deductions and provide evidence. Offer them the chance to do repairs/cleaning and avoid deductions.

Consider Wear and Tear

Normal wear and tear is not a valid reason for deducting from the deposit. This includes minor scuffs on walls, worn carpets, chips/scratches on surfaces, etc. Ensure deductions are fair and reasonable.

By following these best practices, landlords can avoid misunderstandings and issues related to security deposits in Kentucky. Maintaining open communication and accurate records is key throughout the entire tenancy.

Tips for Tenants

As a tenant in Kentucky, you have specific rights when it comes to security deposits. Here are some tips to make sure you get your full deposit back:

Protect Your Deposit Refund Rights

  • Read your lease thoroughly so you understand your responsibilities for property condition at move-out. This will help avoid surprises or disputes.
  • Take photos and videos of the rental unit when you move in and when you move out. This documents the condition and any damages that were present before you moved in.
  • Get receipts for any payments you make for cleaning, repairs, or replacing items at the end of your lease. These can be deducted from damages claimed by the landlord. 
  • Try to be present for the landlord's move-out inspection if possible. This allows you to address any issues on the spot.
  • Leave a forwarding address with the landlord when you move out for a deposit return.

Document the Property Condition 

  • Do a walkthrough when you first move in and note any pre-existing damages in writing. Submit this to the landlord as a record.
  • Take date-stamped photos and/or video of the entire unit when you move in and when you move out. Pay extra attention to problem areas.
  • Keep copies of any maintenance requests or communications with the landlord regarding repairs, damages, or complaints. 
  • Retain any receipts or invoices for cleaning or repairs you do during your lease or at move-out.

Take Steps if Your Deposit Isn't Returned

  • Contact the landlord in writing if your full deposit isn't returned by the deadline. Politely request the remainder owed to you.
  • Review the landlord's itemized deductions. Ensure they are for damages beyond normal wear and tear and don't include any prohibited fees. 
  • Send a formal demand letter by certified mail if the landlord still doesn't comply. Outline the penalties they face for not returning the deposit.
  • Consult a tenant lawyer if necessary to recover your deposit, and consider filing in small claims court. Having documentation will help prove your case.

Moving Out Checklist

When moving out of a rental property in Kentucky, tenants should take steps to protect their security deposit refund and avoid improper deductions. This moving out checklist covers key tasks tenants should complete:

Cleaning and Repairs

  • Clean all rooms thoroughly wipe down walls, wash floors, clean appliances, etc. Kentucky law allows landlords to deduct for cleaning if the unit is left "unclean."
  • Make any minor repairs needed fix holes in walls, repaint scuffed areas, replace burnt out lightbulbs, etc. Landlords can deduct for damage beyond normal wear and tear.
  • Hire a professional carpet cleaner and provide the receipt. Kentucky landlords can deduct for carpet stains or damage. 
  • Ensure the yard and exterior areas are cleaned up and trash removed. The security deposit covers outdoor areas too.
  • Remove all belongings and trash from the property. Landlords can charge removal fees if items are left behind.

Photographing Property Condition 

  • Take date-stamped photos of each room from multiple angles, showing the cleaned condition. This documents the property's status for the landlord's inspection.
  • Photograph any repairs made, such as holes patched or repainted walls. This shows issues were properly fixed before moving out.
  • Pay special attention to carpet, appliances, walls, bathrooms and other areas prone to damage claims. The photos can counter improper deductions.

Obtaining Landlord's Inspection 

  • Be present for the landlord's move-out inspection if possible. This allows tenants to point out repairs and respond to any damage claims.
  • If unable to attend, ask for a copy of the landlord's inspection report detailing any damages found. Tenants have a right to see this under Kentucky law.
  • Address any reasonable damage claims but dispute excessive or improper deductions. Refer to the move-out photos as evidence if needed.

Following this checklist helps Kentucky tenants leave the property in satisfactory condition and document it, protecting their right to a full refund of the security deposit.

Common Deposit Deductions 

When tenants move out, landlords often deduct fees and damages from the security deposit before returning the remainder. Kentucky law allows landlords to make deductions for unpaid rent, damages beyond normal wear and tear, and other specified fees. However, landlords cannot deduct for normal wear and tear or make unreasonable claims.

Permitted Deductions

Kentucky law allows landlords to deduct the following from security deposits:

  • Unpaid rent
  • Damage repairs beyond normal wear and tear 
  • Utility bills or other charges that the tenant didn't pay
  • Cleaning costs if the unit was left unreasonably dirty
  • Rekeying costs if the tenant didn't return all keys
  • Trash removal or storage fees for abandoned property
  • Late fees and other charges agreed to in the lease

Normal Wear vs. Excessive Damage  

Normal wear and tear is expected when renting a property. Landlords cannot deduct for minor scuffs, worn carpets, faded paint or wallpaper, worn countertops, and similar standard effects of living in a rental.

Excessive damage that exceeds normal wear and tear can be deducted. This includes large stains, holes in walls, broken appliances, damaged floors beyond minor scratches, missing fixtures, and any damage requiring extensive repairs.

Unreasonable Deductions 

Some common unreasonable deductions that landlords should avoid:

  • Routine maintenance and cleaning between tenants
  • Painting walls back to the original color 
  • Worn out carpets at the end of their lifespan  
  • General costs of repairing and maintaining the unit

Kentucky law prohibits landlords from making deductions for these types of standard operating costs and normal wear.

Deposit Return Deadlines

Kentucky law has strict deadlines for when landlords must return security deposits after a tenant moves out:

  • For month-to-month leases, deposits must be returned within 30 days after the tenant provides notice of terminating the lease. 
  • For fixed-term leases, deposits must be returned within 60 days after the lease ends and the tenant vacates the property.

These deadlines apply as long as the tenant provides the landlord with a forwarding address when moving out. If no address is provided, the landlord must hold the deposit for 6 months before claiming it as abandoned property.

Penalties for Missing Deadlines

If a landlord fails to return the deposit within the required timeframe, the tenant has the right to take legal action and recover up to 2x the amount wrongfully withheld. The tenant may sue the landlord in small claims court for return of the deposit plus penalty.

Kentucky law allows judges to award penalty damages up to 2x the deposit amount in cases where the landlord intentionally withheld the deposit in bad faith. However, even unintentional failure to meet deadlines can result in mandatory 1x penalties.

What to Do If Past Deadline 

If the return deadline has passed, the tenant should send a formal demand letter to the landlord requesting return of the deposit within 7 days. This creates documentation of the request that can support a small claims filing. 

If the landlord still does not comply after receiving a written demand, the tenant can file a lawsuit in small claims court without a lawyer. The court can award return of the deposit, mandatory penalties, and court fees.

Tenants should gather evidence like the lease, photos of the property condition, and documentation of repair costs. Keep copies of all demand letters and court filings. With the right documentation, tenants can successfully recover their security deposit plus penalties even after the landlord misses the legal deadlines.

Selling a Rental Property

When a landlord sells a rental property, they must properly transfer security deposits to the new owner to avoid disputes and potential penalties. Here are some key things for landlords to keep in mind:

Transferring Deposits to New Owner

  • Inform tenants in writing that the property is being sold and that their deposit will be transferred to the new owner. Provide the name and contact details for the new owner.
  • Transfer the full security deposit amount for each tenant to the new owner. Do not deduct any amounts prior to transfer.
  • Provide the new owner with a list of tenants, the deposit amount for each, and documentation showing the deposits being held in a compliant account. 
  • Have the new owner sign confirming receipt and responsibility for the deposits. Retain this documentation.

Liability Considerations 

  • Failure to properly transfer deposits to the new owner can result in penalties against the selling landlord.
  • The selling landlord can be held liable if the new owner fails to properly return deposits to tenants. 
  • Keep documentation showing compliant transfer of deposits for at least 6 years after sale.

Preventing Deposit Disputes

  • Do a walk-through inspection with each tenant at move-out to document property condition.
  • Return any non-disputed deposit amounts to the tenant before closing. This avoids confusion over who returns deposits.
  • Ensure the new owner understands legal requirements for deposit deductions in Kentucky, such as allowable damages versus normal wear and tear.

Properly handing off deposits keeps all parties protected under Kentucky law. Consult an attorney for guidance to avoid any liability issues when selling rental property.

Frequently Asked Questions

What happens if a landlord does not return the security deposit within 30 days in Kentucky?

In Kentucky, landlords are required to return the security deposit within 30 to 60 days, depending on the local jurisdiction. If a landlord fails to return the deposit within this time frame, the tenant can sue for the return of the deposit. Additionally, if it's found that the landlord withheld the deposit wrongfully, the tenant may be entitled to recover damages up to twice the amount of the security deposit.

What is the 383.595 statute in Kentucky?

Kentucky Revised Statutes (KRS) 383.595 deals with the handling and return of security deposits. This statute requires landlords to return a tenant's security deposit within 30 to 60 days after the tenant has surrendered the rental property, depending on local laws, minus any amount legally withheld for damages, unpaid rent, or other agreed charges.

Is Kentucky a landlord-friendly state?

Kentucky is generally considered a landlord-friendly state. The laws tend to favor landlords, particularly in areas such as evictions and limited restrictions on rental agreements. For example, there is no state law capping the amount a landlord can charge for a security deposit and the eviction process can be relatively swift.

How long does it take to get a security deposit back in Kentucky?

In Kentucky, the law requires landlords to return the security deposit within 30 to 60 days after the tenant moves out and returns the keys, depending on the specific regulations of the local jurisdiction.

What are renters' rights in Kentucky?

Renters in Kentucky have several rights under state law, including the right to a habitable living environment, the right to have necessary repairs made in a timely manner, and protections against unlawful eviction. Tenants also have the right to receive proper notice before eviction proceedings can be initiated and the right to have their security deposit returned in accordance with state laws.

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