What is a Security Deposit?
Security deposits are one-time upfront deposits which most landlords require tenants to pay before they move into a rental unit. Landlords hold security deposits as a guarantee that tenants will pay their bills and keep their rental unit in good condition.
If a landlord thinks the rental property has been damaged by a tenant or their guests during the tenant’s lease—or if a tenant has failed to pay any rent, utility bills, or other fees for which the tenant is responsible under their lease—the landlord may refuse to return all or part of a tenant’s security deposit refund.
Landlords who withhold all or part of a security deposit refund are required to provide their tenant a list of each individual charge or damage and its cost. This is called an “itemized list.” Landlords are not allowed to withhold any money other than these costs from a security deposit refund for any reason.
Tenants have the right to dispute any costs their landlord withholds from their security deposit refund.
By state law, landlords are required to return a tenant’s security deposit within 21 days of the tenancy ending, but this becomes a bit more complicated depending on how a tenancy ends (more information below).
Do Security Deposits Include Fees and Prepaid Rent?
State law defines a security deposit as the "total of all payments and deposits" given as security and "includes all rent payments in excess of 1 month's prepaid rent." This includes pet deposits, key deposits, and furniture deposits, as well as the last month's rent if that is what the landlord requires. ATCP 134.02(11) There is no such thing as an automatically non-refundable deposit.
Under Wisconsin State law, rental agreements may include provisions that allow landlords to provide and indicate agreement to the use of electronic communication (e-mail, text, etc.) for the security deposit and for any documents related to it such as check-in / check-out sheets and lists of deductions (more information below). Otherwise, hard copies are the safest option. Wis. Stat. 704.10(2), 2017 Wis. Act 317, Sec. 42, Effective 4/18/18.
How Much Can a Landlord Charge?
As much as they want to, as long as it is not discriminatory. State laws place no limit on the amount landlords can charge for security deposits. State laws also removed any preexisting limits in cities like Madison. Wis. Stat. 66.0104(2)(b), 2011 Wis. Act 108, Sec. 1, Effective 12/21/11.
Other Related Vocabulary
- Earnest Money: This is sometimes called hold money, money down, or an application fee. Earnest money includes ALL money which the tenant pays to the landlord before they sign a lease in return for the option of entering into a rental agreement in the future, or for having a rental agreement considered by a landlord, except up to $25 for the actual cost of a credit check) and up to $25 for a background check for tenants applying from out of state. ATCP 134.02(3), Wis. Stat. 704.085, 2017 Wis. Act 317, Sec. 41, Effective 4/18/18.
- Normal Wear and Tear: This is a term that Wisconsin laws use, but do not define in detail. It refers to the deterioration of the premises that occurs during normal conditions where the tenant cleans regularly and cares for the premises reasonably. If the tenant and landlord cannot come to an agreement, a small claims court judge will decide if the issue goes to court.
- Security Deposit (in brief): The money a tenant pays to a landlord when entering into a rental agreement to guarantee the tenant's obligations. It is any amount above one month's prepaid rent (including all pet deposits, key deposits, and furniture deposits). There is no such thing as an automatically non-refundable deposit.
How Should a Tenant Protect Their Security Deposit?
Fill Out a Check-In Form
When a tenant moves in, the landlord is required to give the tenant a check-in sheet and let the tenant know they have seven days to inform the landlord of any pre-existing damages or defects to the apartment unit. ATCP 134.06(1)(a)1, Wis. Stat. 704.08, 2011 Wis. Act 143, Sec. 18, Effective 3/31/12.
If the tenant doesn't get a check-in form, they can make their own or use the Tenant Resource Center's sample. The tenant should make a copy of the complete document for themselves and send the original to the landlord within the deadline the landlord gives. This deadline must be at least 7 days. If the landlord doesn't follow check-in procedures, it will be difficult for them to prove the initial condition of the apartment when they try to deduct from the security deposit. Tenants should still fill in their own check-in sheets and take photos or videos of the initial condition of the apartment.
When filling out the check-in form, be thorough! The landlord cannot charge for any pre-existing damages, but documentation is key. Note problems with the unit such as:
- Stained carpets or damaged floors
- Cracked windows
- Torn or missing screens
- Nail holes, cracked paint, peeling wallpaper
- Dirty conditions, fixtures, and appliances
- Stained walls and ceilings
- Plumbing, sinks, bathtubs, and tiles that are worn, dirty, mildewed, or not working properly
- Missing light bulbs or glass light covers
- Electrical outlets or other items that do not work (light switches, stove burners, oven coils, etc.)
- Countertops that are stained, scratched, or damaged
Get a Witness
Tenants can have a friend who isn't living with them witness the conditions at move-in, and initial the tenant’s check-in form or write a separate statement about what they saw.
Take Photos or Video
Carefully photograph or video the apartment when you move in. Tenants should be extra careful to document all damage. When taking photos or video, consider putting a note with the date and apartment number or address in the photos. This will help you prove when the photos were taken and give a reference for how big a particular stain or area of damage might be. Tenants should send photos or video to the landlord soon after moving in and keep copies for themselves.
Requests for Previous Tenant's Charges to Security Deposits
In addition to doing a check-in form and telling the tenants they have the right to inspect the apartment, the landlord must also inform the tenant of their right to request a list of any charges to the previous tenant's security deposit. The landlord can require that the request be in writing. If the tenant does this, the landlord must send a list of deductions from the previous tenant's deposit within 30 days, or 7 days after they notify the previous tenant of their deductions, whichever is later. ATCP 134.06(1) If this list has additional damages that were not fixed prior to the current tenant moving in, and the new tenant did not initially include them on their check-in sheet, this list will be important evidence of the condition of the unit when the tenant moved in. It can also prevent the landlord from charging both sets of tenants for the same damage.
Read Nonstandard Rental Provisions
This is the part of the lease where the landlord must note all things that they will take from the security deposit beyond what the law states they may deduct for, such as late fees. Tenants should make sure the landlord is only charging for actual damages they can document. The landlord cannot charge for liquidated damages (random fees), even if they are listed in the Nonstandard Rental Provisions. For example, $500 for having a beer keg in your apartment. Landlords may be confused or encouraged by the passage of more recent laws, but nothing has changed that allows them to charge penalties for items that do not include damage to property or money losses. ATCP 134.06(3)(b), Wis. Stat. 704.28(2)
Landlords are no longer required to "discuss" (but must still “identify”) any Nonstandard Rental Provisions which allow deductions from the security deposit for things not included in ATCP 134.06(3)(a) If the tenant signs or initials the Nonstandard Rental Provision, it is presumed the landlord “identified” the provision and the tenant agreed. Wis. Stat. 704.28(2), ATCP 134.06(3)(b), CR 14-038, Sec. 7 & 8, Effective. 11/1/15.
What Should Tenants Do Before Leaving an Apartment?
Tenants should try to schedule a check-out appointment with the landlord. If the landlord agrees to do this, tenants should leave with a signed copy of the check-out form. If the landlord notes things that are dirty or damaged, the tenant can offer to clean or fix them at that time to avoid getting charged for it.
If the landlord won't go through the apartment with the tenant, tenants should complete their own check-out form and take pictures documenting the condition of the apartment, including places the tenant cleaned or fixed things. Remember to put something in the photo to use as a reference point for the date and the size of damages. Consider having the same witness who was present for check-in help with the check-out.
If the landlord presents the tenant with a check-out form that lists damages the tenant (or their roommates/guests) did not cause, the tenant should not sign it. Instead, they should complete their own check-out form and keep a copy. Keep copies of everything!
Also, tenants should make sure to leave their forwarding address on the check-out form or somehow put this in writing to the landlord. Landlords are no longer required to mail the security deposit to the tenant's last known address if the tenant does not leave a forwarding address. Landlords still have to “deliver or mail” the security deposit, but there is no requirement in the regulations about where to send it. It could end up at an old co-signer's address, the apartment address, etc. ATCP 134.06(2), CR 14-038, Sec. 4, Effective. 11/1/15.
What Can the Landlord Deduct From Your Security Deposit?
Standard Legal Deductions
- Unpaid rent (some exceptions in Wis. Stat. 704.29)
- Unpaid utilities owed under the rental agreement, or for which the landlord becomes responsible
- Damages caused by the tenant or their guests that go beyond "normal wear and tear"
- Unpaid monthly municipal permit fees, Wis. Stat. 704.28, 2011 Wis. Act 143, Sec. 22, Effective 3/31/12. The Consumer Protection regulations used to call these "mobile home parking fees." This was updated on 11/1/15 to be consistent with 704.28. ATCP 134.06(3)(a)5, CR 14-038, Sec. 6, Effective. 11/1/15.
The Consumer Protection regulations were also changed to clarify that deductions are made from a full amount of the security deposit, and only for the amount that is reasonably necessary to pay for things they were allowed to deduct. ATCP 134.06(3)(a), CR 14-038, Sec. 6, Effective. 11/1/15.
Nonstandard Legal Deductions
The landlord can deduct for things other than what's listed above only if it is otherwise legal to charge for it AND if the tenant initialed provisions on a separate page titled "NONSTANDARD RENTAL PROVISIONS" when they signed the lease. This may include things like late fees. ATCP 134.06(3)(b), Wis. Stat. 704.28(2)
Landlords may never deduct from the security deposit for "normal wear and tear" or for other losses that the tenant is not responsible for under the law, even if the tenant signed a Nonstandard Rental Provision authorizing these deductions. ATCP 134.06(3)(c), Wis. Stat. 704.28(3)
It is illegal to deduct for routine carpet cleaning from the security deposit even if the tenant signed a lease that states that they must pay for carpet cleaning. The exception is if the tenant(s) damaged the carpet beyond "normal wear and tear." If the landlord deducts money from the security deposit for routine carpet cleaning, tenants can consider taking further action( see below). ATCP 134.06(3)(c), Wis. Stat. 704.28(3) Be aware that the landlord may still try to get the money in small claims court!
A new note in ATCP 134.06(3)(c) makes it clear that even though a landlord is allowed to write a lease saying the tenant has to pay for routine carpet cleaning, they may not take this out of the security deposit. Any carpet cleaning charges they collect in advance must be treated as part of a security deposit, which must be subject to a refund. Deductions cannot include "normal wear and tear." Essentially, a landlord would have to sue a tenant as a separate matter if they did not pay for routine carpet cleaning required by the lease. CR 14-038, Sec. 10, Effective 11/1/15.
When Must a Landlord Return the Deposit?
The landlord has 21 days after the tenancy ends* to send the full security deposit and/or an itemized list of deductions. If they wrote it into the lease, they can send this electronically. Wis. Stat. 704.28(4), Wis. Stat. 704.10(2), 2017 Wis. Act 317, Sec. 42, Effective. 4/18/18. If the landlord doesn't do this, the law allows the tenant to take further action (see below), but the landlord doesn't waive the right to charge for damages after that date.
*The landlord no longer returns the security deposit based on when the premises is "surrendered." Now, the landlord has to return the security deposit 21 days after any of the following:
- The date the lease ends, if the tenant leaves at the end of the lease ATCP 134.06(2)(a); or
- The date the lease ends or the date a new tenant’s lease begins, if the tenant is evicted or leaves before the lease ends ATCP 134.06(2)(b); or
- The date the premises is known to be vacated or the date that the tenant is removed due to an eviction if the tenant is evicted due to holding over. ATCP 134.06(2)(c)
What if the Tenant Moves Out Early?
If the tenant moves out before the lease is over, the tenant should write a letter stating the day they are moving and return the keys to the landlord so there is no question of whether they still have possession of the apartment. The 21 day countdown starts on the day the rental agreement ends or the date a new tenancy begins, whichever is sooner. There are exceptions for subletting. (See Ending Your Lease for more information about possible changes for rent while the unit is vacant.) Wis. Stat. 704.28(4)(b).
This law went into effect for anyone vacating their leases early as of 3/31/12. Before, the landlord had 21 days from the day the tenant "surrendered the premises." The tenant had to notify the landlord in writing if they moved out early, otherwise they would have to wait until the lease was over for 21 days to begin. ATCP 134.06(2)(b), MGO 32.07(7) If a lease has a provision that is contrary to this law, the law first goes into effect when that lease is renewed. Wis. Stat. 704.28, 2011 Wis. Act 143, Sec. 22, Effective 3/31/12.
Who Should the Deposit be Returned to?
The landlord should return it to whoever the tenants told the landlord in writing to make the check out to, or whoever the landlord chooses to return it to if there were no written instructions. The regulations no longer tell the landlord they have to put everyone's names on the check, so tenants who rent together should think carefully about who they want the check going to and getting cashed by. It is easier to have it be just one person, but there is more accountability if everyone has to sign it. ATCP 134.06(2), CR 14-038, Sec. 4, Effective 11/1/15; MGO 32.07(7)(c)
Does my Landlord Have to Pay Interest?
No, the state of Wisconsin does not require it, and a 2011 law took away any local municipalities' ability to require interest. Wis. Stat. 66.0104(2)(b), 2011 Wis. Act 108, Sec. 1, Effective 12/21/11. However, in the City of Madison, landlords still owe interest until 12/21/11 for deposits held when the law changed, or for any period of time if it says in the lease that they will pay interest, even if they are returning them much later. See below for how to calculate interest.
Exception: Interest on Security Deposits Held Prior to 2011 Law Change in City of Madison
If the security deposit was more than half of a month's rent, the landlord must pay simple interest from the time the tenant paid the deposit until 12/21/11. MGO 32.07(3) The interest rate changes every year as follows, and the amount of interest is changed on the anniversary of the date it was initially received:
2004 - 0.81%
2005 - 0.72%
2006 - 0.83%
2007 - 0.94%
2008 - 0.94%
2009 - 0.75%
2010 - 0.46%
2011 - 0.37%
For example, if a tenant paid $1,000 for a security deposit on January 10, 2005, moved into the unit on August 15, 2005, and moved out August 14, 2007, that tenant would receive:
0.72% interest from January 10, 2005 - January 10, 2006 which equals $7.20, plus
0.83% interest from January 10, 2006 - January 10, 2007 which equals $8.30, plus
0.94% interest from January 10, 2007 - August, 14, 2007 which equals $5.55 (calculated by 0.94% x $1,000 x the part of the year that the tenant resided there which is 59%)
The return would be a total of $1,021.05, assuming no deductions were taken.
These past rates can also be found under the State of Wisconsin Department of Financial Institutions' (DFI) "historical interest rates" to be paid by Wisconsin's financial institutions for money held in escrow accounts for real estate.
If the security deposit was half of one month's rent or less, the landlord does not need to pay interest for the time it was held prior to the law change unless the lease says otherwise. MGO 32.07(3), Wis. Stat. 66.0104(2)(b), Effective 12/21/11.
Can a Tenant Cash a Partial Check?
It is risky. The regulations no longer guarantee that a tenant can still sue for the rest of the amount they feel they are owed. If the tenant absolutely must cash the check, they can write "Partial Payment" or "Rights Reserved" on the check and include a letter to the landlord explaining they are only accepting this as a partial payment. ATCP 134.06(2), CR 14-038, Sec. 4, Effective. 11/1/15
What if the Landlord Doesn't Follow These Rules?
If the landlord does not return the security deposit and/or list of deductions within the required 21 days, or if the landlord took out money for things the tenant disagrees with, the tenant may sue the landlord for double the amount wrongfully withheld, plus court costs and reasonable attorney's fees. ATCP 134, Wis. Stat. 100.20(5), Wis. Stat. 66.0104(2)(b)
Process for the Tenant:
Write a Letter to the Landlord
A sample letter is available here. Whatever the tenant sends should include the following:
- A description of each deduction they disagree with and why.
- Specific mention of the law or laws that have been violated, such as ATCP 134.06, Wis. Stat. 704.28, Effective 12/21/11 or 3/12/14.
- An explanation that the tenant could take further action, including small claims court for double the amount wrongfully withheld, court costs, and reasonable attorney's fees or filing a complaint with Consumer Protection (see below). ATCP 134, Wis. Stat. 100.20(5), Wis. Stat. 66.0104(2)(b)
- A reasonable deadline for the landlord to return the total deposit (for example, an exact date 5—14 days away).
Tenants should be sure to keep a copy of the letter for their records!
File a Complaint with Consumer Protection
Tenants can easily file a complaint with the Department of Agriculture, Trade and Consumer Protection. The bureau keeps complaint records and will contact the landlord about the violation. To get a complaint form, call (608) 224-4953 or (800) 422-7128 or fill one out online.
Sue in Small Claims Court
Tenants can sue any time they feel the landlord owes them money, but it may look better if they write a letter first and then wait until after the deadline expires and the landlord still doesn't respond. Then the tenant can sue the landlord in small claims court for double what was wrongfully withheld plus court costs and reasonable attorney's fees. Wis. Stat. 100.20(5), Wis. Stat. 704.95, Wis. Stat. 66.0104(2)(b)
NOTE: If the landlord returns the money before the tenant files in court, the tenant can no longer sue since now they are not owed any money. Double damages only apply if the case goes to court.
To sue, the tenant must go to their county small claims court, fill out a simple "summons and complaint" form, and pay the $94.50 filing fee. (This fee may be waived if you receive Food Stamps or BadgerCare or are otherwise low-income.) If the tenant wins, the landlord will have to pay them back for that filing fee plus any court costs, or reasonable attorney's fees awarded by the court. The landlord might not contest the case, they might try to settle, or they might counter-sue for more money the landlord feels they are owed.
Dane County Small Claims Court is located at 215 S. Hamilton St. For folks outside of Dane County, go to the Wisconsin Circuit Court System to contact your county's courthouse, If you have more questions, see our Small Claims Court Tips.