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Return of Security Deposit
At the end of the tenancy, a landlord must return the tenant's security deposit or give the tenant a written explanation as to why the deposit or any part of it has not been returned, Minnesota Statute 504B. 178. Interest on the security deposit is calculated as simple noncompound interest per year. The interest rate is 3% per year until August 1, 2003 and 1% per year thereafter.
The landlord must make the refund within 21 days after the day the tenancy ends. The tenant must give the landlord a forwarding address. If the tenant has to leave because the building was condemned, the landlord must return the deposit within five (5) days after the tenant leaves, again the tenant must give the landlord a forwarding address or delivery instructions. This does not apply if the condemnation was the tenant's fault through his/her malicious or irresponsible conduct.
If the landlord does not return the security deposit in the time allowed, the landlord must pay the tenant an amount equal to two times the amount of the deposit wrongfully withheld, plus interest. Minnesota law allows a landlord to withhold from a security deposit only the amount necessry for unpaid rent, damages to the rental unit beyond ordinary wear and tear, or other money owed to the landlord under an agreement, Minnesota Statute 504B.178 subd. 3(b)(1).
When the landlord's interest in the property ends (for example, because of death, foreclosure or contract for deed cancellation), the security deposit must be transferred to either the new owner of the tenant. This transfer must be done within 60 days after the current landlord's interest in the property ends or when the new landlord is required to return the security deposit under the rules as discussed previously, whichever comes first.