Key Takeaways
- Oregon law doesn’t limit the amount a landlord can charge for a security deposit, but it must be clearly outlined in the lease.
- Most nonrefundable fees are prohibited, and landlords may only deduct from deposits for specific reasons.
- Landlords must return the deposit within 31 days after tenancy ends, or they may face penalties of up to twice the wrongfully withheld amount.
In Oregon, security deposits are governed by clear statutory rules under Oregon Revised Statutes. Whether you manage one rental or a growing portfolio, understanding Oregon's security deposit laws is essential to protecting your investment and maintaining a legally sound tenancy.
For a landlord, collecting a security deposit from a new tenant offers real financial protection, including covering unpaid utilities at move-out, offsetting excessive cleaning costs, recovering lost rent, addressing lease abandonment or early termination, and repairing excessive property damage.
In this guide, we at PMI Central Oregon will provide a general overview the state’s security deposit laws.
Security Deposit Limit in Oregon
Oregon doesn’t cap on how much a landlord can charge for a security deposit. Landlords may require any deposit amount they consider reasonable, provided the amount is clearly stated in the written rental agreement.
This applies consistently across property types and tenant groups. Oregon keeps a uniform standard statewide, which gives landlords flexibility when setting deposit amounts based on their specific property and risk profile.
Landlords cannot increase or add a new deposit requirement during the first year of a tenancy unless the parties mutually agree to modify the lease. After the first year, they may require a new or increased deposit, but must give the tenant at least three months to pay it.
Nonrefundable Fees in Oregon
Deposits collected under ORS § 90.300 are refundable; landlords cannot reclassify deposit funds as "nonrefundable".
What Oregon does allow are specific, statutorily permitted fees such as a late rent fee, an NSF fee, or a fee for a pet kept in violation of the rental agreement. These fees must be tied to a specific landlord expense and must be disclosed to the tenant in writing.
Storing a Tenant's Deposit in Oregon
Statewide, landlords may hold deposit funds in any reasonable manner, as long as they can return the funds within the legally required timeframe. Regardless of where the deposit is held, Oregon law does require landlords to provide the tenant with a written receipt for any security deposit paid.
This receipt should be issued promptly upon collection and retained as part of the tenancy file. You must also ensure that you treat all tenants and their security deposits equally and in accordance with Fair Housing Laws.
Written Notice After Security Deposit Receipt
Oregon statewide law doesn’t require landlords to provide tenants with written notice regarding the receipt of their deposit beyond the receipt itself. It does, however, require that any written rental agreement include a description of all deposits and fees the landlord requires.
A clear, documented move-in statement that identifies the deposit amount, the conditions under which it may be withheld, and the refund timeline creates an unambiguous paper trail if a dispute arises at move-out or during an eviction.
Reasons to Withhold a Tenant's Security Deposit in Oregon
Allowable deductions include:
- Unpaid rent.
- Cleaning costs required to return the unit to its move-in condition.
- Repairs for damage that exceeds normal wear and tear.
- Replacement of items damaged through tenant negligence.
- Costs related to unauthorized alterations made by the tenant.
What landlords cannot deduct for includes:
- Normal wear and tear; faded paint, minor carpet wear, small scuffs, and similar signs of ordinary tenancy. These are considered a standard cost of doing business in Oregon.
- Pre-existing conditions; damage or issues that existed before the tenant moved in and were documented at move-in.
- Improvements that upgrade the property beyond its condition at the start of the tenancy.
- Damage caused by events outside the tenant's control.
The Move-Out Inspection in Oregon
Oregon law gives tenants the right to request a pre-move-out inspection. Here is how the process works under Oregon law:
- The tenant must request the inspection in writing.
- The inspection must occur within seven days of the tenant vacating, and no more than two weeks before the end of the tenancy.
- The landlord must provide the tenant at least 24 hours' written notice of the date and time of the inspection.
- The tenant has the right to be present during the inspection.
- After the inspection, the landlord should provide the tenant with a written statement of any issues observed.
For landlords, this inspection reduces last-minute surprises and establishes a shared, documented record of the property's condition near the end of the tenancy.
Security Deposit Refund in Oregon
Oregon's 31-day deadline is one of the most critical rules in the state's landlord-tenant law. Once the tenancy ends and the tenant has surrendered possession of the property, the landlord has 31 calendar days to return the full deposit or return any remaining balance after lawful deductions, along with an itemized statement explaining each deduction.
The 31-day clock begins only after both the tenancy has terminated and the tenant has delivered possession. If a landlord fails to return the deposit or provide the itemized accounting within 31 days, the tenant has the right to sue for up to twice the amount wrongfully withheld, plus potential attorney fees.
The itemized statement must clearly describe each charge. Invoices, receipts, or contractor quotes strengthen your position if the deductions are challenged in small claims court. When deductions exceed the deposit amount, landlords must still provide the accounting within 31 days and can bill the tenant separately for the remaining balance.
Change in Property Ownership
When a rental property changes hands Oregon law addresses what happens to the tenant's deposit. The outgoing landlord has two options: return the deposit to the tenant or transfer the deposit to the new owner. Regardless of which option is chosen, the incoming landlord assumes all obligations at the time of transfer.
Bottom Line
Security deposits are straightforward in concept, but Oregon's rules around how you collect, hold, document, and return them are specific and legally consequential. For landlords managing properties in Bend and throughout Central Oregon, working with an experienced local property manager is one of the most effective ways to stay compliant.
If you have specific questions about a security deposit situation, we encourage you to consult a qualified Oregon attorney. For property management services, PMI Central Oregon's team is here to help! Contact us today!
Disclaimer: This blog should not be used as a substitute for legal advice from a licensed attorney in your state. Laws frequently change, and this post might not be updated at the time of your reading. Please contact PMI Central Oregon for any questions you have regarding this content or any other aspect of your property management needs.
