Most landlords in Oregon require tenants to pay a security deposit prior to signing the written rental agreement and moving in to the dwelling unit. And understandably so, security deposit funds helps provide a layer of financial cushion to landlords under certain circumstances during a tenancy. For example, in the event that a tenant is unable to pay the last month's rent deposit, a tenant breaks the terms of the rental agreement, or they end up causing excessive rental damage to the premises.

Be that as it may, there are rules that landlords must abide by in the state of Oregon when it comes to security deposits. OR Rev Stat § 90.300 is the piece of regulation that primarily regulates the collection and return of security deposits. It is important that landlords are familar with the landlord tenant law, including tenant rights, and security deposit laws.

As an Oregon residential landlord, the following are the basics of the security deposit laws under the landlord-tenant act that you should know about.

1. There is no limit to how much security deposit a landlord may ask from a tenant.

Oregon doesn’t require landlords to abide by a certain limit when it comes to security deposits. This means that any landlord may request that their tenant pays whatever amount of security deposit they wish so long as it's stated in the rental agreement. They typically consist of the last month's rent deposit.

Nonetheless, as an Oregon residental landlord, you should be reasonable with the amount you charge your tenants for security deposit. The equivalent of one or two months rent deposit is usually ideal.

We don't recommend any landlord charges an increased security deposit price as it may be off putting to potential tenants. It should be enough to financially cushion the landlord against costs incurred by certain potential negligent or careless actions their Oregon tenant may commit to their premises during the tenancy. Such as, breaking the rental agreement or causing actual damages exceeding ordinary wear and tear to the rental property.

2. A landlord may charge a pet deposit in Oregon.

Under state law in Oregon, tenants may be asked for an additional pet security deposit if the landlord requires it. The landlord must, however, refrain from levying any charges to tenants with service animals. That’s because “disability” is a protected class under the federal fair housing laws, and reasonable accommodation should be made for these tenants, including allowing the trained service animal.

service dog

The act requires that landlords provide all tenants with equal and fair access to housing regardless of certain classes. Other than disability, other protected classes in Oregon that you should know as a landlord include race, color, nationality, religion, sex, familial status, income source, marital status, sexual orientation, and gender identity.

The government body tasked with administering the state’s civil rights laws is the Oregon Bureau of Labor and Industries Civil Rights Division.

3. There is no requirement for how a landlord may store the security deposit.

Some states specify how a landlord may keep their tenant’s security deposit during their tenancy. Neither of these requirements, however, apply according to Oregon law. In Oregon, a landlord may store this security deposit any way they would like during the tenancy.

4. Oregon landlords must provide tenants with a written receipt after receiving their deposit or prepaid rent.

As a landlord in Oregon, you have an obligation to provide your tenants with a written notice receipt after having the security deposit paid for the rental unit. You must also cite the amount, along with regular monthly rent, in the lease or rental agreements.

This also applies to prepaid rent. The landlord must not accept any payment of any prepaid rent, fee, or additional security deposit as per the rental agreement, if the tenant fails to provide them with the written accounting required or receipt of the money paid. Security deposits, or any portion of them, do not count as prepaid rent.

5. A landlord may keep some or all of the tenant’s deposit in certain situations.

Returning security deposuts isn't always guaranteed-- in Oregon, landlords may keep some or all of their tenant’s deposit for the rental property in certain legally acceptable scenarios. The specific scenarios are as follows.

  • For unpaid rent or as prepaid rent.
  • Any other breach to the rental agreement that causes financial damage to the landlord.
  • Lost month's rent incurred because of being unable to rent out a dwelling unit while cleaning or repairing it.
  • Cleaning fees or labor costs for the carpet if it requires more than just a common vacuum cleaner.
  • Damage exceeding normal wear and tear.

home repairs

Speaking of normal wear and tear, what is it exactly? Well, normal or ordinary wear and tear refers to damage that occurs due to the normal use of the property by a tenant. Examples of such damage include fading wall paint, loose door handles, gently worn carpets, lightly scratched glass and stained bath fixtures.

Excessive damage, on the other hand, refers to damage to the premises that results from negligence, carelessness, abuse or misuse by a tenant. Examples include broken windows, holes in the wall, broken tiles, pet damage, or missing fixtures.

6. Oregon landlords don’t have to perform a walk-through inspection.

There is no regulation in Oregon that requires landlords to perform a walk-through inspection prior to a tenant moving out. With that said, the tenants have a right to request one. They also have a right to bring someone to act as a witness during the final inspection process.

7. Landlords in Oregon have exactly 31 days after the tenant delivers possession to return the security deposit.

As an Oregon landlord, you must refund your tenant’s security deposit, with written accounting of any deductions, within 31 days after moving out. Every landlord must return the portion of the deposit to the tenant either in person or via first-class mail in this timely manner. It is up to the resident to provide their landlord with a forwarding address to send the deposit to.

Every landlord must also remember to accompany the security deposit with a written accounting of any deductions they’ve made. The written statement must include the reasons for the money deduction and the approximate cost of repairs.

security deposit

If the landlord fails to follow these rules, however, tenants can sue for wrongful deductions or wrongful withholding after the tenancy terminates. If the ruling is in their favor, they may be entitled to up to twice the amount of money because it was wrongfully withheld.

8. A landlord may utilize one of two options after selling their investment property in regards to the resident’s security deposit.

The first option is to transfer all the security deposit to the incoming landlord, less allowable deductions. You must then provide the tenant with the names and address of the incoming landlord they will rent from.

The second option would be to transfer the deposit after the tenancy, less allowable deductions, to the tenant.

Bottom Line

Our experts at Campus Connection Property Management have decades of experience when it comes to managing investment properties in the Eugene/Springfield area. If you're a landlord looking for a property management company in Eugene, Oregon, get in touch to learn more!

Disclaimer: This blog is in no way intended to be a substitute for professional legal information or advice. Laws change and this blog may not be updated at the time of your reading. For expert help in Oregon security deposit laws or any other aspect of the state’s landlord-tenant laws, Campus Connection Property Management can help.