South Dakota Security Deposit Laws: 2024 Updates

The foundational legal basis for property rights in the state is established by the South Dakota Constitution. Under SDCL § 43-32-24, South Dakota law requires landlords to return residential security deposits or provide a written statement of deductions within 14 days after tenancy termination and receipt of the tenant's forwarding address. Commercial properties follow a separate track under SDCL § 43-32-6.2.

Residential Security Deposits

1. The One-Month Cap (SDCL § 43-32-6.1)

The standard security deposit for a residential unit cannot exceed one month's rent.

• Exception: A larger deposit may be agreed upon between the lessor and the lessee where special conditions pose a danger to the maintenance of the premises. This can include a pet deposit, which may allow for a total deposit of up to two months' rent.

2. The 14-Day Return Rule (SDCL § 43-32-24)

Landlords must adhere to the following timelines for returning residential security deposits:

• Initial Deadline: The landlord must return the security deposit (or the balance) within 14 days after the termination of the tenancy and receipt of the tenant's mailing address or delivery instructions.
• Written Statement: If any portion is withheld, a written statement showing the specific reason for the withholding must be furnished to the tenant within this same 14-day window.
• Itemized Accounting: Within 45 days after the termination of the tenancy, upon request of the lessee, the landlord must provide an itemized accounting of any deposit withheld.

Commercial Security Deposits (SDCL § 43-32-6.2)

Commercial property owners operate under different statutory timelines:

• No Statutory Cap: There is no legal limit on the amount of a commercial security deposit.
• 60-Day Return: The landlord has 60 days after the tenant vacates to return the deposit.
• 90-Day Itemization: If requested by the tenant, the landlord must provide an itemized list of deductions within 90 days.

Allowable Deductions

Landlords may deduct from the security deposit for:

• Unpaid Rent: Any balance due at the end of the term.
• Damages: Costs to repair damage beyond "normal wear and tear."
• Cleaning: Costs to restore the unit to its move-in cleanliness level.

Penalties for Late Return (SDCL § 43-32-24)

If a residential landlord fails to comply with the statutory deadlines for returning the deposit or providing the required statements:

• Forfeiture: They automatically forfeit all rights to withhold any portion of the deposit.
• Civil Liability: The tenant may sue for the full return of the deposit.
• Punitive Damages: Bad faith retention of a deposit or failure to provide the required written statement or itemized accounting may subject the landlord to punitive damages not to exceed two hundred dollars.

Non-Refundable Fees

Any money given to the landlord "at the beginning of the tenancy" to secure the performance of a residential rental agreement is deemed a security deposit and is subject to the security deposit return rules. Therefore, non-refundable cleaning fees are generally not permitted.

Interest on Security Deposits

South Dakota law does not require landlords to pay interest on security deposits.

Best Practices for Landlords

1. Request Forwarding Addresses: Do this during the move-out inspection. The 14-day clock starts when the tenancy ends and you receive the address.
2. Document Everything: Use the Landager move-in/move-out checklist with photos to justify any deductions.
3. Handle Interest Properly: South Dakota law does not require you to pay interest on deposits, but many landlords use a separate escrow account as a best practice for organization.

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