Minnesota Security Deposit Law: The 21-Day Rule, Interest, and Deductions
Last reviewed: July 2026
Minnesota has one of the more landlord-specific deposit rules in the Midwest: a firm 21-day return window, required interest, and real penalties for holding money back in bad faith. Here is the plain-English version for independent landlords.
The 21-day deadline
After a tenancy ends and the tenant moves out, a Minnesota landlord must return the security deposit — or send a written statement explaining any amount withheld — within 21 days.
Send it to the tenant’s forwarding or last known address. Put the date on the calendar the moment the tenant hands back the keys; the 21 days runs whether or not the tenant asks for the deposit back.
Minnesota requires interest on the deposit
Minnesota is one of the states that requires landlords to pay interest on a security deposit. The interest is simple, non-compounded, at the rate set by statute (currently 1% per year).
You owe the interest even on a portion you end up withholding for damages. Build it into whatever you return so the final number is right.
What you can withhold
A Minnesota landlord may withhold from the deposit for amounts the tenant actually owes: unpaid rent and other obligations under the lease, and the cost of repairing damage to the unit beyond ordinary wear and tear.
When you withhold, you must give the tenant a written statement describing the basis for each amount kept. Specific beats vague — “replace stained bedroom carpet: $220” holds up; “cleaning/damage: $400” invites a dispute.
What you cannot deduct
You cannot charge the tenant for ordinary wear and tear — the gradual, expected aging of a unit that comes from someone simply living there. Faded paint, minor carpet wear, and small nail holes are the landlord’s cost of doing business, not a deduction.
The line is “beyond normal wear and tear.” A documented move-in condition report, ideally with dated photos, is what lets you show a specific charge is real damage rather than ordinary aging.
Why bad-faith withholding is expensive
Minnesota backs the 21-day rule with teeth. A landlord who withholds a deposit in bad faith can be liable to the tenant for the amount wrongfully withheld plus additional punitive damages, and may owe attorney’s fees. The safe path is simple: document move-in condition, itemize every deduction in writing, add the required interest, and send it all within 21 days.
How Landlord Command helps
- Security deposit tracking — Track each deposit, its status, and an itemized return — so your state’s return deadline is never a scramble.
- Move-in / move-out inspections — Document unit condition with photos at check-in and compare at move-out — your record if a deduction is ever questioned.
Frequently asked questions
How long does a Minnesota landlord have to return a security deposit?
Within 21 days after the tenancy ends and the tenant moves out, the landlord must return the deposit (with interest) or send a written statement explaining any amount withheld.
Does Minnesota require landlords to pay interest on deposits?
Yes. Minnesota requires simple, non-compounded interest on the deposit at the rate set by statute — currently 1% per year — including on any portion later withheld.
What can a Minnesota landlord deduct from a deposit?
Unpaid rent and other amounts owed under the lease, and the cost of repairing damage beyond ordinary wear and tear — each described in a written statement to the tenant.
What happens if a Minnesota landlord withholds a deposit in bad faith?
The tenant can recover the amount wrongfully withheld plus additional punitive damages, and the landlord may owe attorney’s fees. Treat the 21-day deadline and the interest requirement as firm.
This guide is general information for Minnesota landlords, not legal advice. Laws change and specific situations vary — confirm the current requirements under Minn. Stat. ch. 504B, or consult an attorney, before acting.