Every landlord will want to collect a security deposit before handing over the keys to a rental property. In Oregon the landlord has no limitation on the amount of security deposit that can be charged, so most landlords will ask for 1-2x the monthly rent amount, depending on the amenities in the rental unit. There are some more specific aspects of the security deposit collection, use, and return in Oregon that need to be understood.

Receipt Required

Oregon landlords must provide a receipt for any security deposit they collect, and the amount of the deposit must be noted in the rental agreement that is signed by both landlord and tenant.

Per O.R.S. § 90.300, prepaid or last month’s rent should be held as a security deposit. If the landlord requests a new or increased security deposit after the first year of the tenancy, the tenant must be allowed at least three months to pay the new or increased amount, per O.R.S. § 90.300.

Allowable Charges, Including Carpet Cleaning

As in all states, the landlord can use the security deposit to pay for any breach of the rental agreement. Such breaches would include damage to the premises, furniture, fixtures, carpet, or appliances; abandonment of the premises; nonpayment of rent; late charges; and attorney’s fees. Of course, any such damage is beyond damage due to ordinary wear and tear. An important distinction in the security deposit statute in Oregon is that the landlord is not required to repair damage caused by the tenant in order for the landlord to make a claim against the deposit for the cost to make the repair. And finally, there is a carpet cleaning clause in the statute which allows the landlord to deduct the cost of carpet cleaning regardless of whether the tenant cleans the carpet before possession is delivered to the landlord.

Return Of Security Deposit

Oregon law does not require that the landlord conduct a move-out inspection with the tenant, but a move-out inspection is always a good idea. Prior to move-out, the tenant should provide a forwarding address to the landlord for purposes of the return of the security deposit. If the landlord collected any last month’s rent upfront it must be applied to the rent due for the last month of the tenancy. The landlord then has 31 days after the termination of the rental agreement or move-out by the tenant, whichever occurs last, to return the security deposit with an itemized security deposit receipt and prepaid rent settlement statement listing any deductions. It is important when there is prepaid rent that the landlord provides a separate accounting for security deposits and for prepaid rent.