North Dakota Commercial Security Deposits: Rules & Limits
Learn about security deposit handling for commercial properties in North Dakota, where the lease agreement dictates the terms.
Legal Disclaimer
This content is for general informational and educational purposes only. It does not constitute legal advice and should not be relied upon as such. Laws change frequently — always verify current regulations and consult a licensed attorney in your jurisdiction for advice specific to your situation. Landager is a property management platform, not a law firm.Information last verified: May 2026.
North Dakota Commercial Security Deposit Laws
In North Dakota, the regulation of security deposits is governed by NDCC § 47-16-07.1, which applies to both "real property" (commercial) and "dwellings" (residential). While many states allow broad freedom of contract for commercial leases, North Dakota imposes specific statutory requirements on how commercial deposits are capped, held, and returned.
Contrary to common belief, commercial landlords in North Dakota are subject to statutory limits and must adhere to strict accounting and interest-bearing requirements if the tenancy exceeds nine months.
1. Statutory Deposit Caps
Under NDCC § 47-16-07.1, a lessor of real property may not demand or receive a security deposit exceeding one month's rent. However, the statute provides specific exceptions for individual tenants:
- Felony Incentive: A lessor may accept up to two months' rent as security from an individual convicted of a felony offense as an incentive to rent the property to that individual (NDCC § 47-16-07.1(1)(a)).
- Prior Judgments: A lessor may demand up to two months' rent as security from an individual who has had a judgment entered against them for violating the terms of a previous rental agreement (NDCC § 47-16-07.1(1)(b)).
Note that these exceptions apply specifically to natural persons ("individuals") and do not explicitly extend to corporate entities or entity principals.
2. Trust, Escrow, and Interest Requirements
North Dakota law requires commercial landlords to maintain security deposits in a specific manner:
- Interest-Bearing Accounts: The lessor must deposit security money in a federally insured interest-bearing savings or checking account for the benefit of the tenant (NDCC § 47-16-07.1(1)).
- Interest Payments: The deposit and any accrued interest must be paid to the lessee upon termination of the lease, provided the occupancy lasted at least nine months (NDCC § 47-16-07.1(3)).
3. Return Deadlines and Deductions
Commercial landlords must adhere to a strict statutory timeline for returning funds and providing documentation.
- 30-Day Deadline: The landlord must deliver or mail an itemized list of deductions and the remaining balance within 30 days after the termination of the lease and delivery of possession (NDCC § 47-16-07.1(3)).
- Allowable Deductions: Under NDCC § 47-16-07.1(3), a commercial lessor may apply the deposit and interest toward:
- Any damages suffered due to deteriorations or injuries to the real property caused by the lessee's pet or through the negligence of the lessee or the lessee's guest.
- Any unpaid rent.
Important Note on Cleaning: While residential landlords can deduct for cleaning and repairs necessary to return a dwelling to its original state (NDCC § 47-16-07.1(3)(c)), this specific provision is statutorily restricted to "dwelling units" and does not explicitly extend to commercial real property.
See our Commercial Maintenance Obligations guide.
How Landager Helps Commercial Landlords in North Dakota
Managing large commercial deposits—especially when commingling is legally permitted but practically dangerous—kills accounting efficiency. Landager provides enterprise-grade ledger separation without the banking fees. When you collect a $40,000 commercial deposit for a new North Dakota manufacturing facility, Landager securely logs the funds as a protected liability on your balance sheet, distinct from your operating revenue. When the multi-year lease concludes, the system instantly cross-references the tenant's exact lease to enforce your custom 60-day return window, compiling all unpaid late fees and outstanding CAM reconciliation charges into a flawless, itemized final disbursement statement.
Official Law Citation: This information is derived from N.D.C.C. § 47-16-07.1. For current statutes, visit the North Dakota Legislative Branch.
Sources & Official References
Frequently Asked Questions
▶What are the North Dakota landlord-tenant laws every property owner should know?
Residential tenancies in the Peace Garden State are governed by the North Dakota Century Code (NDCC) Chapter 47-16 (Leasing of Real Property). This guide covers the essential compliance requirements for property owners and landlords.
Read the complete guide▶What is the North Dakota eviction process and how long does it take?
The North Dakota eviction process requires landlords to provide written notice to tenants before filing a court action. The type and length of notice depends on the reason for eviction — typically shorter for non-payment of rent and longer for lease violations or no-fault terminations. Self-help evictions (changing locks, removing belongings, shutting off utilities) are illegal in North Dakota. The full court process varies but typically takes several weeks.
Read the complete guide▶What are the North Dakota security deposit rules and return deadlines?
North Dakota has specific rules governing how much landlords can charge for security deposits, how deposits must be held, and the deadline for returning deposits after a tenant moves out. Landlords must provide an itemized statement of any deductions made from the deposit. Failure to comply with deposit return deadlines can result in penalties and the forfeiture of the landlord's right to claim deductions.
Read the complete guide▶What are the North Dakota rent increase laws and caps for landlords?
North Dakota has specific rules governing when and how landlords can increase rent. During a fixed-term lease, rent generally cannot be increased unless the lease explicitly allows it. For month-to-month tenancies, landlords must provide proper written notice before an increase takes effect. Check whether North Dakota has any local rent control ordinances that may impose additional caps or requirements.
Read the complete guide▶What is the grace period for late rent in North Dakota?
North Dakota has specific rules regarding grace periods for late rent and the amount that can be charged as a late fee. Late fee provisions must be stated in the lease agreement, and fees must be reasonable. Check North Dakota state law and any applicable local ordinances for the exact grace period and late fee limits that apply to your rental property.
Read the complete guide▶What disclosures must North Dakota landlords provide to tenants?
North Dakota landlords must provide certain disclosures to tenants before or at the time of lease signing. Common required disclosures include lead-based paint hazards (for pre-1978 buildings, a federal requirement), the identity of the landlord or property manager, and any known material defects in the property. Additional state-specific disclosures may include flood risk, mold hazards, and environmental conditions.
Read the complete guide▶What are the North Dakota lease requirements for rental properties?
North Dakota recognizes both written and oral leases, though written leases are strongly recommended for terms longer than one year. Lease agreements should include the rent amount, payment due date, security deposit terms, maintenance responsibilities, and rules regarding entry, pets, and subletting. Certain lease clauses that waive tenant statutory rights may be void and unenforceable under North Dakota law.
Read the complete guide▶What are North Dakota landlord maintenance obligations and habitability standards?
North Dakota landlords must maintain rental properties in a condition that is fit for habitation and complies with applicable building, housing, and health codes. This includes maintaining structural integrity, plumbing, heating and cooling systems, electrical systems, and pest control. Tenants typically have the right to request repairs in writing, and if repairs are not made within a reasonable time, tenants may have legal remedies available.
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