Security Deposit Law
What South Dakota 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
One month's rent, unless both parties agree to more for special conditions.
Interest
No. South Dakota does not require landlords to pay interest on security deposits.
Return deadline
Two weeks (14 days) — increasing to 21 days on July 1, 2026.
A landlord may not demand or receive a security deposit worth more than one month's rent. A larger deposit is allowed only where the landlord and tenant agree to it because special conditions pose a danger to maintenance of the premises (for example, certain pet or property-risk situations).
Nothing in SDCL chapter 43-32 (Lease of Real Property) requires a landlord to hold deposits in an interest-bearing account or to pay interest to the tenant. Any interest obligation would have to come from the lease itself.
The clock starts after BOTH the termination of the tenancy AND the landlord's receipt of the tenant's mailing address or delivery instructions. Within that window the landlord must either return the deposit or furnish a written statement showing the specific reason for withholding any portion. Separately, if the tenant requests it, the landlord must provide an itemized accounting of any amount withheld within 45 days after termination. Effective July 1, 2026, SL 2026 ch. 179 changes the two-week deadline to twenty-one days; the 45-day accounting rule is unchanged.
South Dakota law does not require security deposits to be held in a separate or dedicated account, and does not restrict commingling with the landlord's other funds. Keeping deposits segregated is still good practice so the money is available within the short two-week return window.
A landlord who fails to comply with § 43-32-24 forfeits all rights to withhold any portion of the deposit. Bad-faith retention of any part of the deposit — including failure to provide the required written statement or itemized accounting — additionally exposes the landlord to punitive damages of up to $200.
No notable municipal security-deposit ordinances identified in South Dakota (including Sioux Falls and Rapid City); the state statutes in SDCL ch. 43-32 are the operative rules statewide.
The two-week (21 days from July 1, 2026) deadline runs from the termination of the tenancy AND receipt of the tenant's mailing address or delivery instructions. If a tenant never gives you a forwarding address, the clock has not started — but document your attempts to get one.
You may withhold only amounts reasonably necessary to remedy defaults in rent, other funds due under the agreement, or to restore the premises to their move-in condition — ordinary wear and tear excepted.
If the tenant asks, you must provide an itemized accounting of anything withheld within 45 days after termination of the tenancy. This is separate from the initial written statement of reasons due in the two-week window.
You can only exceed the one-month cap where special conditions pose a danger to maintenance of the premises and the larger deposit is agreed between landlord and tenant. Put the condition and the agreement in the lease.
SL 2026, ch. 179 (effective July 1, 2026) rewrites § 43-32-24 to give landlords twenty-one days instead of two weeks to return the deposit or send the written statement. The deduction categories, 45-day accounting, forfeiture, and $200 punitive damages provisions carry forward.
SDCL § 43-32-24 (version effective July 1, 2026; SL 2026, ch 179, § 1)
You forfeit ALL rights to withhold any portion of the deposit — even for legitimate damage or unpaid rent — and bad-faith retention adds punitive damages up to $200.
The statute expressly excludes ordinary wear and tear from restoration deductions; improper deductions risk forfeiture of withholding rights and the $200 bad-faith penalty.
The excess violates § 43-32-6.1; the over-cap demand is unlawful unless both parties agreed to it because special conditions pose a danger to maintenance of the premises.
Failure to provide the itemized accounting within 45 days is noncompliance with the section — triggering forfeiture of withholding rights — and is expressly listed as a basis for the bad-faith punitive damages of up to $200.
Until June 30, 2026 the two-week deadline governs; relying on 21 days for a tenancy that ends before the effective date means a late return and forfeiture of withholding rights.
SDCL § 43-32-24 (current and July 1, 2026 versions; SL 2026, ch 179, § 1)
One month's rent is the maximum, no matter what the deposit is called. You can charge more only if you and the tenant agree to a larger deposit because special conditions pose a danger to maintenance of the premises — document that agreement and the specific condition in the lease. (SDCL § 43-32-6.1)
Two weeks after the tenancy ends and you have received the tenant's mailing address or delivery instructions. Within that window you must either return the deposit or send a written statement giving the specific reason for withholding any portion. Starting July 1, 2026, the deadline becomes 21 days. (SDCL § 43-32-24)
Only amounts reasonably necessary to cover unpaid rent, other funds the tenant owes you under the rental agreement, or the cost of restoring the unit to its move-in condition. Ordinary wear and tear can never be deducted. If the tenant requests it, you must provide an itemized accounting of anything withheld within 45 days. (SDCL § 43-32-24)
You forfeit all rights to withhold any portion of the deposit — the tenant becomes entitled to the full amount even if there was real damage. If a court finds bad faith, you can also owe punitive damages of up to $200 on top of the deposit. (SDCL § 43-32-24)
No. Chapter 43-32 has no separate-account, escrow, or interest requirement for residential deposits. Keeping deposits in a dedicated account anyway makes it easier to refund within the short statutory window.
Yes. SL 2026, ch. 179 (effective July 1, 2026) rewrites SDCL § 43-32-24 to extend the return deadline from two weeks to twenty-one days. The deduction rules, 45-day itemized accounting, forfeiture rule, and $200 bad-faith punitive damages all remain.
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.
Tenvale tracks deposits, interest, and deadlines for you — free for 30 days, no credit card required.
See full pricing and other states.