Security Deposit Law
What Kentucky landlords must do with security deposits — the cap, interest, return deadline, account rules, and penalties — with citations to the statute itself.
Verified as of June 11, 2026
This page is general information, not legal advice. Statutes change — verify with the cited sources or an attorney.
Deposit cap
No statutory cap — Kentucky law does not limit how much you can charge as a security deposit.
Interest
No — Kentucky does not require landlords to pay interest on security deposits.
Return deadline
No fixed refund deadline — instead, 30- and 60-day windows govern what happens to unclaimed deposits.
KRS 383.580 governs how residential security deposits must be held and accounted for, but it contains no maximum deposit amount. The statute's duties (separate account, signed damage listings) apply no matter the size of the deposit you set.
KRS 383.580 says nothing about interest on deposit funds. Unless your lease promises interest, any earnings on the deposit account are not owed to the tenant.
KRS 383.580 sets no flat deadline for refunding a deposit a tenant actively claims. If the tenant 'leaves not owing rent and having any refund due,' the landlord 'shall send notification to the last known or reasonably determinable address, of the amount of any refund due the tenant,' and may remove and keep the deposit only if no response arrives 'within sixty (60) days from the sending of such notification' (subsection (7)). If the tenant 'leaves not paying his last month's rent and does not demand a return of his deposit,' the landlord 'may, after thirty (30) days, remove the deposit from the account and apply any such excess to the debt owing' (subsection (6)).
KRS 383.580(1) requires all tenant deposits to be held 'in an account used only for that purpose, in any bank or other lending institution subject to regulation by the Commonwealth of Kentucky or any agency of the United States government,' and prospective tenants 'shall be informed of the location of the separate account and the account number.' Note that the forfeiture rule in subsection (4) is conjunctive — a landlord loses the right to retain any of the deposit only if the deposit was not held in the required separate account AND the initial and final damage listings were not provided — and subsection (4) references only the separate-account requirement of subsection (1), not the location/account-number disclosure. A single failure alone does not literally trigger (4), but treat both the account and the listings as mandatory; relying on the conjunctive wording is a litigation gamble, not compliance.
Under KRS 383.580(4), 'No landlord shall be entitled to retain any portion of a security deposit if the security deposit was not deposited in a separate account as required by subsection (1) of this section and if the initial and final damage listings required by subsections (2) and (3) of this section are not provided' — both failures together trigger the forfeiture. Separately, a tenant who disputes the final damage listing may sue in District Court, but only over the items the tenant specifically dissented from; a tenant who neither signs nor dissents recovers nothing under the section (subsection (5)).
Kentucky's URLTA (KRS 383.505–383.705, including the deposit rules of KRS 383.580) is local-option: KRS 383.500 lets cities, counties, and urban-county governments adopt it only 'in their entirety and without amendment,' and bars any other local ordinance on the subjects it covers — so adopting localities cannot layer extra deposit rules on top. Louisville/Jefferson County Metro and Lexington-Fayette are the widely reported adopters, but no official statewide list of adopting localities exists in the KRS; verify adoption with each local government.
Deposits must sit in 'an account used only for that purpose' at a bank or lending institution regulated by Kentucky or a U.S. agency, and prospective tenants 'shall be informed of the location of the separate account and the account number' (KRS 383.580(1)).
Before any deposit money changes hands, the prospective tenant must receive a comprehensive listing of existing damage that could be charged against the deposit, with estimated repair costs, and may inspect the unit to verify it. Both parties sign; the signatures are conclusive evidence of the listing's accuracy (except latent defects), and a refusing tenant must state dissents in writing (KRS 383.580(2)).
At termination of occupancy the landlord must inspect, compile a comprehensive listing of damage charged against the deposit with estimated repair costs, and let the tenant inspect and sign (or dissent in writing) — the same signature-conclusiveness rules as move-in (KRS 383.580(3)).
A tenant disputing the final listing may sue in District Court, but the claim is limited to items the tenant specifically dissented from; a tenant who fails to sign the listing or dissent 'shall not be entitled to recover any damages under this section' (KRS 383.580(5)). Your signed listings are the evidence that wins these disputes.
If the tenant leaves owing the last month's rent without demanding the deposit, you may apply it to the debt after thirty (30) days (KRS 383.580(6)). If the tenant leaves owing nothing with a refund due, you must notify the tenant's last known address of the refund amount and may keep the deposit only after sixty (60) days with no response (KRS 383.580(7)).
KRS 383.500 authorizes cities, counties, and urban-county governments to adopt the Uniform Residential Landlord and Tenant Act (KRS 383.505 to 383.705, which numerically includes 383.580) — but only 'in their entirety and without amendment,' and no other local ordinance may cover those subjects. Confirm which regime governs each property's locality.
That combination triggers total forfeiture: 'No landlord shall be entitled to retain any portion of a security deposit if the security deposit was not deposited in a separate account as required by subsection (1) of this section and if the initial and final damage listings required by subsections (2) and (3) of this section are not provided' (KRS 383.580(4)).
You miss the subsection (2) requirement that the listing come 'prior to tendering any consideration deemed to be a security deposit,' lose the conclusive signed evidence of move-in condition for any later District Court dispute, and put one leg of the subsection (4) forfeiture trigger in place.
When a tenant leaves owing nothing with a refund due, you must first notify the last known or reasonably determinable address of the refund amount; only after sixty (60) days with no response may you remove the deposit 'free from any claim of the tenant.' Skip the notice and the tenant's claim stays alive.
Kentucky's URLTA is local-option (KRS 383.500); whether KRS 383.580's duties bind landlords outside adopting localities is contested, and adopting localities apply the full Act. Misjudging the regime for a given property means following the wrong rulebook.
No. KRS 383.580 regulates how deposits are held and accounted for but sets no maximum amount. Landlords commonly charge one to two months' rent, but that is market practice, not a legal cap.
Kentucky sets no fixed refund deadline. If the tenant leaves owing no rent with a refund due, you must send notice of the refund amount to their last known address; if they don't respond within 60 days of that notice, you may keep the deposit. If the tenant leaves owing the last month's rent and never demands the deposit, you may apply it to the debt after 30 days. Best practice is to refund promptly once the final damage listing is settled.
Yes. Deposits must be held in an account used only for that purpose at a bank or lending institution regulated by Kentucky or a federal agency, and you must inform prospective tenants of the account's location and account number (KRS 383.580(1)).
No. KRS 383.580 contains no interest requirement. You only owe interest if your lease promises it.
If you also failed to keep the deposit in the required separate account, KRS 383.580(4) bars you from retaining any portion of the deposit. Even standing alone, skipping the signed listings costs you the statute's conclusive evidence of the unit's condition, which is what wins deposit disputes in District Court.
Not automatically. The deposit statute sits within Kentucky's local-option URLTA, which applies only in cities, counties, and urban-county governments that adopt it in its entirety (KRS 383.500). Louisville/Jefferson County Metro and Lexington-Fayette are widely reported adopters, though no official statewide list exists — verify with your local government, and follow KRS 383.580 as a baseline either way.
This page is general information, not legal advice. Statutes change — verify with the cited sources or an attorney.
Statute facts on this page were verified against the cited official sources on June 11, 2026.
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