In Arkansas, the regulations surrounding security deposits for commercial properties are remarkably different-and significantly less restrictive-than those for residential properties. Because Arkansas law views commercial landlords and commercial tenants as sophisticated parties engaging in an arms-length business transaction, the state does not impose statutory limits or strict handling requirements on commercial security deposits.

The entirety of the rules governing a commercial security deposit must be established within the commercial lease agreement.

Statutory Limits on Commercial Security Deposits

There is no maximum limit imposed by Arkansas state law on the amount a landlord can charge for a commercial security deposit.

Unlike residential leases (which are generally capped at explicitly defined parameters, often two months' rent), commercial landlords are free to negotiate the security deposit amount based on the risk profile of the tenant, the specific nature of the business, and the scope of the landlord's build-out or tenant improvements.

| Aspect | Arkansas Commercial Law | :--- | :--- | | Maximum Deposit Amount | No statutory limit; determined by the lease. | Separate Account Required | No. Commingling of funds is legally permissible unless prohibited by the lease. | | Interest Payments Required | No. Landlords are not required to pay tenants interest on held deposits. |

Handling and Commingling of Funds

Arkansas law does not require commercial landlords to hold security deposits in separate, interest-bearing escrow accounts

Unless the commercial lease explicitly states otherwise:

• The landlord may commingle the security deposit with their own operating funds.
• The landlord may use the deposit for other business purposes, provided they can return the funds according to the terms of the lease upon termination.
• Any interest earned on the deposit belongs to the landlord, not the tenant.

Best Practice: Even though it is not legally required, maintaining security deposits in a separate ledger or account is highly recommended as a best practice in commercial property management to ensure liquidity when a lease terminates.

Returning the Commercial Security Deposit

The Arkansas statutes that mandate a strict 60-day or 30-day timeline for the return of a residential security deposit (along with itemized lists of deductions) do not apply to commercial leases.

The Lease Dictates the Timeline

The deadline for returning a commercial security deposit must be explicitly drafted into the lease agreement

Commercial leases frequently structure return timelines depending on when the tenant officially vacates, when the final CAM (Common Area Maintenance) reconciliation is completed, or when any damage assessments are finalized.

Permitted Deductions

Because statutory definitions do not constrain commercial properties, landlords may deduce funds from the commercial security deposit for any reasons outlined in the lease, which commonly include:

• Unpaid base rent or percentage rent.
• Unpaid CAM charges, taxes, or insurance obligations.
• Costs to repair damages beyond normal wear and tear.
• Costs associated with the tenant failing to restore the premises to its original condition (if required by the lease).
• Legal fees incurred due to the tenant's default.

If the lease is entirely silent on the handling of the deposit (which is rare), general contract law applies, implying that the deposit must be returned within a "reasonable" time frame, sans legitimate deductions.

See our Commercial Lease RequirementsPreview unavailable guide for more details on structuring lease terms.

How Landager Helps Commercial

Landlords Managing commercial security deposits effectively requires meticulous bookkeeping

Landager allows Arkansas commercial landlords to seamlessly track security deposit balances, record custom ledger entries for permissible deductions mapped directly to lease clauses, and easily calculate final reconciliation statements at the end of a tenancy. Back to Arkansas Landlord-Tenant Laws OverviewPreview unavailable.