REFUND OF THE SECURITY DEPOSIT

At the end of the tenancy, a landlord must return a tenant's security deposit plus simple, non-compounded interest, (139) or give the tenant a written explanation as to why the deposit (or any part of the deposit) will not be returned. The landlord must do this within 21 days after the day the tenancy ends, provided that the tenant has given the landlord a forwarding address. If a tenant has to leave because the building is condemned, the landlord must return the deposit within five days after the tenant leaves, and after receipt of the tenant's new address or delivery instructions (unless the condemnation was due to the tenant's willful, malicious or irresponsible conduct). (140) 

If the landlord does not return the deposit or return an explanation in the time allowed, the landlord must pay the tenant a penalty equal to the amount withheld and interest and also pay the tenant the amount of the deposit and interest wrongfully withheld. (141) 

Minnesota law allows a landlord to withhold from a security deposit only the amount necessary for unpaid rent (142), damages to the rental unit beyond ordinary wear and tear (143), or other money the tenant owes to the landlord under an agreement (e.g. water bills). (144) 

When a 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 or returned to the tenant. This 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 discussed earlier, whichever is the earlier time. (145)

If a landlord does not return or transfer the deposit, the court may penalize the landlord $200 for each deposit not returned or transferred.

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