Minnesota security deposit rules.
The Minnesota rules for residential security deposits in plain English: how much can be charged, how fast it comes back, whether interest is owed, and what catches operators out.
Last reviewed · Statute: Minn. Stat. § 504B.178 · Not legal advice
How much can be charged
No statutory limit on the deposit amount.
When it has to come back
21 days from termination and receipt of forwarding address (5 days if eviction was due to building condemnation).
Interest
Interest is required on deposits at 1% simple annual rate, accrued from the date of deposit.
Where the money has to sit
No segregation requirement, though best practice is to hold separately.
What catches operators out
- The 1% statutory rate is a state floor — even when bank rates are lower, landlords owe 1%.
- Bad-faith retention triggers punitive damages of $500 plus actual damages.
What this looks like with Standby in Minnesota.
When a resident takes a Standby certificate there is no cash deposit to hold, so the cap, the return deadline and the interest rules above have nothing to attach to. You are covered up to the full deposit and draw on it when you need to.
When a resident pays cash instead, Standby handles that deposit under your lease and Minnesota law, so your team is not tracking interest and return deadlines by hand.
This page summarises the most common single-family and multifamily residential rule in Minnesota. Furnished units, senior leases, mobile-home tenancies and short-term rentals can differ, and city ordinances may override the state default. Check the statute before relying on a figure for a specific lease.