Kentucky Security Deposits and Lease Requirements: What Landlords Must Know

Kentucky's security deposit law (KRS §383.580) is one of the few landlord-tenant rules that applies statewide — it doesn't matter whether your property is in a URLTA or non-URLTA jurisdiction. Get it wrong and a tenant can sue you for the full deposit plus damages.

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Security Deposits

No Statutory Maximum

Kentucky sets no cap on the security deposit amount. One month's rent is the most common practice, but you can charge more if market conditions or property risk justify it. Whatever you charge, put it in the lease.

The Separate Account Requirement

This is the rule most Kentucky landlords get wrong.

Security deposits must be kept in a separate account at a financial institution. You must notify the tenant of the account location and account number. If you fail to maintain a separate account, you lose the right to keep any portion of the deposit — regardless of how much damage the tenant caused.

A deposit sitting in your general checking account, co-mingled with operating funds, is a deposit you've legally forfeited. Open a dedicated account before you collect a single dollar of deposit.

Move-In Documentation

At move-in, provide the tenant with a complete written list of any existing damage to the property. This is the baseline against which move-out condition will be measured. A signed move-in checklist with timestamped photos is your best protection in any deposit dispute. See our complete Move-In Checklist for Landlords.

The Return Deadline

Return the full deposit within 30 days of lease termination if you have no deductions. If you have deductions, provide a written itemized statement and return the remainder within 60 days. The 60-day timeline is a firm legal deadline — a lease that purports to extend it to 90 days conflicts with the statute and is unenforceable.

If you miss either deadline, the tenant can recover the full deposit amount regardless of any legitimate deductions you had.

Permitted Deductions

You can deduct for:

• Unpaid rent
• Damage beyond normal wear and tear
• Cleaning costs required by conditions beyond normal use
• Other charges permitted by the lease

You cannot deduct for normal wear and tear — minor scuffs, faded paint, carpet worn from normal foot traffic, small nail holes. Courts in Kentucky interpret this narrowly.

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Lease Requirements

Kentucky doesn't mandate a specific lease form, but certain provisions are legally essential — particularly in non-URLTA counties where the lease is your primary legal document.

What Every Kentucky Lease Must Include

• Names of all landlords and tenants
• Property address — full description of the rental unit
• Lease term — start and end dates, or designation as month-to-month
• Rent amount, due date, and accepted payment methods
• Late fee terms — must be in the lease to be enforceable; in URLTA areas, capped at 10% of monthly rent, not chargeable until 5 days after due date
• Security deposit amount and conditions for deductions
• Entry notice — specify the notice you'll give before non-emergency entry
• Pet policy — including any pet deposit or monthly pet fee
• Maintenance process — how tenants submit requests and your response timeline
• Termination and renewal terms

What You Cannot Include

A lease clause waiving a tenant's rights under KRS Chapter 383 is void — the rights persist regardless of what the lease says. Specifically:

• You cannot waive the tenant's right to a security deposit return with an itemized statement
• You cannot include a clause allowing eviction if a tenant calls 911 or seeks emergency assistance
• Retaliation protections (KRS §383.705) cannot be bargained away in a lease

Month-to-Month Tenancies

When a fixed-term lease expires and the tenant continues paying rent without signing a new lease, it converts to a month-to-month tenancy. Either party can terminate with 30 days written notice.

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The Non-URLTA Lease: Do More Work Upfront

In non-URLTA counties — which includes most of Western Kentucky — the lease carries the full weight that statute carries in Louisville or Lexington. A generic internet lease template may not address Kentucky's specific rules or your county's local ordinances.

Invest in a well-drafted, Kentucky-specific lease before your first tenant moves in. TameRent generates state-specific leases through its Rocket Lawyer integration. Ask Marlo to review your current lease for gaps before you sign with your next tenant.