Minneapolis Security Deposit Rules: What the Rental Dwelling License Ordinance Adds to Minnesota Law

A landlord in Minneapolis has to satisfy two sets of rules at once: the Minnesota statute, Minn. Stat. § 504B.178, and the city's own Rental Dwelling License Ordinance (Minneapolis Code § 244.2040). The state law sets the 21-day return deadline after termination of the tenancy and receipt of the tenant's mailing or delivery address; the local ordinance adds rules on deposit cap, paying the deposit in installments and receipt and itemization. Where the two overlap, the landlord has to meet the stricter one.

What the Rental Dwelling License Ordinance adds

• Deposit cap: Security deposits are capped at one month's rent, or half a month's rent if the landlord also requires other pre-tenancy payments beyond the first month; units rented through a nonprofit or agency referral may take up to 1.5 months. (244.2040(b))
• Paying the deposit in installments: Where the half-month cap applies, the landlord may not refuse a tenant's request to pay the deposit in installments over up to three months. (244.2040(b))
• Receipt and itemization: When returning or accounting for the deposit under Minn. Stat. 504B.178 the landlord must also deliver a city-approved written notice of deposit rights. (244.2040(c))
• Other local rule: Landlords must give a 30-day written pre-eviction notice itemizing amounts due before filing a nonpayment eviction. (244.2060)

Who it covers: Rental dwelling units licensed under Ch. 244 Art. XVI (city rental licensing covers rented dwellings city-wide); effective June 1, 2020 (Ord. 2019-038). Interest and return timing remain governed by Minn. Stat. 504B.178.
Worth knowing: Interest and the return deadline stay under Minn. Stat. 504B.178; the ordinance changes only the cap, installments and the rights notice.

What Minnesota law already requires

• Return deadline: 21 days after termination of the tenancy and receipt of the tenant's mailing or delivery address.
• Detail: Five days if the tenant had to leave because of condemnation.
• Itemized deductions: required in writing.
• Forwarding address: the tenant should give one in writing; it affects the deadline or the remedy.
• Penalty for wrongful withholding: A landlord who fails to return or itemize on time owes the amount withheld plus interest, plus a penalty equal to the amount wrongfully withheld; bad-faith retention adds punitive damages of up to $500.
• Interest: Simple interest at 1% per year.
• Small claims limit: $20,000.
• Statute: Minn. Stat. § 504B.178.

Using both rules together

1. Read the lease for the deposit amount, the move-in date, and any clause that mentions the ordinance.
2. Check the local rule first: deposit cap under Minneapolis Code § 244.2040, then paying the deposit in installments and receipt and itemization.
3. Count the Minnesota deadline of 21 days from termination of the tenancy and receipt of the tenant's mailing or delivery address.
4. A written demand that cites both Minn. Stat. § 504B.178 and Minneapolis Code § 244.2040 carries more weight than one that cites either alone. A landlord who fails to return or itemize on time owes the amount withheld plus interest, plus a penalty equal to the amount wrongfully withheld; bad-faith retention adds punitive damages of up to $500.

Frequently Asked Questions

Q: Does Minneapolis require interest on security deposits?
A: The Rental Dwelling License Ordinance does not add an interest rule, so Minnesota law governs. Simple interest at 1% per year.

Q: Is the Minneapolis deposit return deadline different from Minnesota law?
A: No. The Rental Dwelling License Ordinance does not change the return deadline, so the Minnesota rule applies: 21 days after termination of the tenancy and receipt of the tenant's mailing or delivery address under Minn. Stat. § 504B.178.

Q: Does the Rental Dwelling License Ordinance apply to my unit?
A: Rental dwelling units licensed under Ch. 244 Art. XVI (city rental licensing covers rented dwellings city-wide); effective June 1, 2020 (Ord. 2019-038). Interest and return timing remain governed by Minn. Stat. 504B.178. Check the section cited below for the full list of exemptions before relying on it.

Q: Can I sue my landlord in small claims court for my Minnesota deposit?
A: Yes. Minnesota small claims court hears claims up to $20,000, which covers most deposits plus the statutory penalty. A dated written demand that cites Minn. Stat. § 504B.178 is the usual first exhibit.

Sources Checked

• Minneapolis Code §§ 244.2040, 244.2060, Rental Dwelling License Ordinance: code text, read 2026-09-20
• Minn. Stat. § 504B.178 (the Minnesota statute cited above)
• LeaseLenses Minnesota deposit data set, last reviewed 2026-09-19; the same data powers the Minnesota demand letter tool
• Minnesota landlord-tenant overview and the Minnesota deposit rules page

This page is general legal information for Minneapolis, Minnesota, not legal advice. Local ordinances are amended more often than state statutes; read the current code text before relying on a figure in court.