Security deposit interest in Iowa
Yes — Iowa landlords must pay interest on security deposits once the deposit has been held longer than 5 years.
Work out what you are owed in Iowa
Enter your deposit and dates to see what Iowa law entitles you to.
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Not legal advice. This is an estimate for informational purposes only and is not legal advice. Security deposit laws change and vary by jurisdiction. Verify with the cited statute or consult a licensed attorney in your state before taking action.
How is the Iowa interest rate set?
No fixed statutory rate. The deposit may be held in an interest-bearing trust account, and the statute gives all interest earned during the first five years of a tenancy to the landlord. Only interest earned after five years belongs to the tenant, at whatever rate the account actually pays. In practice almost no tenant reaches this threshold, so most Iowa tenants receive nothing.
What does Iowa law actually say?
Iowa requires residential rental deposits to be held for the tenant in a federally insured bank, savings and loan, or credit union, and not commingled with the landlord's personal funds. The deposit may be held in a trust account, which may be a common account and may be interest-bearing, but the statute expressly gives any interest earned during the first five years of a tenancy to the landlord. Only interest accruing after five years belongs to the tenant.
Deposits are capped at two months' rent. The landlord must return the deposit, or give a written statement of the specific reasons for withholding it, within 30 days of termination and receipt of the tenant's mailing address.
When must an Iowa landlord return the deposit?
30 days after the tenancy ends.
What if your landlord does not comply?
Failure to provide the written statement within 30 days forfeits the landlord's right to withhold any part of the deposit. Bad-faith retention subjects the landlord to punitive damages up to twice the monthly rent, in addition to actual damages. The court may award reasonable attorney fees to the prevailing party. If the tenant provides no mailing address within one year of termination, the deposit reverts to the landlord.