Start with the question almost nobody asks first: does the security deposit law even apply to you?

A surprising number of New Hampshire rentals fall outside RSA 540-A entirely, and a surprising number of landlords who are covered assume they aren't. Both mistakes are expensive, because the penalty for getting this wrong is double the deposit.

Who the law covers — and who it doesn't.

RSA 540-A:5 defines "landlord" for security deposit purposes, and the definition carves out two significant groups:

1. Someone who rents a single-family residence and owns no other rental property.
2. Someone who rents units in an owner-occupied building of five units or fewer.

If you're in either category, the security deposit rules generally don't apply to you.

But read the next clause. The exemption does not apply to any individual unit in such a building occupied by a person or persons 60 years of age or older. A landlord living in a four-unit building is outside the statute — until one tenant turns 60, at which point that unit falls squarely inside it.

The subdivision also excludes rentals for vacation or recreational purposes. The New Hampshire Supreme Court confirmed as much in a 2020 case, holding the legislature didn't intend these restrictions to reach short-term vacation rentals.

If you own more than one rental property, or a building you don't live in, none of this helps you. You're covered.

What counts as a "security deposit" is broader than you think.

Here's the provision that catches the most landlords. Under RSA 540-A:5, II, a security deposit means all funds in excess of the monthly rent which are transferred from the tenant to the landlord for any purpose.

For any purpose. That language sweeps in:

• Last month's rent collected up front
• Pet deposits and pet fees
• Cleaning fees
• Key or fob deposits
• Move-in fees

If a landlord collects first month, last month, and a "damage deposit" each equal to one month's rent, the second two are both security deposit — and together they exceed the statutory cap before anyone has moved a box.

Calling something a non-refundable fee doesn't change the analysis. The statute looks at what moved, not what it was labeled.

The cap: one month's rent or $100, whichever is greater.

RSA 540-A:6, I(a). That's the ceiling, and it's the total across everything that qualifies as a deposit.

Longer rent cycles don't change it. A lease requiring quarterly rent payments still limits the deposit to the equivalent of one month's rent on top of the initial rent payment.

The receipt and the five-day window.

Upon receiving a deposit, the landlord must forthwith deliver a signed receipt stating the amount and specifying where the deposit will be held. The receipt must also tell the tenant that any conditions needing repair should be noted on it, or given to the landlord in writing, within five days of occupancy.

One exception: no receipt is required when the deposit comes by personal check, bank check, or a check from a government or nonprofit agency on the tenant's behalf — the check itself is the record. But even then, the landlord must still give written notice about the five-day condition list.

Tenants: that five-day window is your protection. Photograph everything, write down every scuff and stain, and deliver the list in writing within five days. Move-out disputes are won and lost on whether a move-in record exists.

Landlords: the receipt is cheap to get right and costly to skip. New Hampshire courts have excused minor deviations where a landlord substantially complied and the tenant received all the required information — but "substantial compliance" is a defense you argue after being sued, not a strategy.

The money isn't yours.

RSA 540-A:6, II is unambiguous: security deposits continue to be the money of the tenant and are held in trust. They cannot be mingled with the landlord's personal funds or treated as an asset of the landlord.

A landlord may pool all deposits into a single trust account at a New Hampshire bank, savings and loan, or credit union. Alternatively, a landlord can post a bond with the clerk of the city or town where the property sits, in the amount of the deposits held there, which exempts them from the account requirement.

Using deposit money for operating expenses is not a gray area. It's a violation.

Selling the property? The deposit goes to the grantee at the time the deed is delivered, or within five days after, and the tenant must be notified by registered or certified mail with the new holder's name and address. Do that and you're relieved of liability for it.

Interest

A landlord holding a deposit for one year or longer owes interest, at the rate paid on regular savings accounts at the New Hampshire institution where it's deposited. For pooled accounts, each tenant gets a proportional share of the actual interest earned.

Two provisions landlords often don't know exist:

1. On request, the landlord must tell the tenant the name of the institution, the account number, the amount on deposit, and the interest rate — and must let the tenant examine the security deposit records.
2. Every three years, a tenant may request the accrued interest, made 30 days before the expiration of that year's tenancy. The landlord has 15 days after that year's tenancy expires to comply.

Returning the deposit: 30 days, itemized, with evidence.

This is where most disputes live. Under RSA 540-A:7, the deposit and any interest due must be returned within 30 days from the termination of the tenancy.

Deductions are allowed for damage beyond reasonable wear and tear, unpaid rent, an agreed share of real estate tax increases, and other lawful charges under the lease. But the landlord must provide a written, itemized list that:

1. Indicates with particularity the nature of each repair needed, and
2. Includes satisfactory evidence that the repair has been or will be completed

The statute spells out what evidence looks like: receipts for materials, labor estimates, bills, or invoices showing actual or estimated cost. A one-line note saying "carpet damage — $600" does not satisfy this.

"Reasonable wear and tear" is doing real work in that sentence. Faded paint, worn carpet in traffic paths, and minor nail holes are the cost of renting property. A hole punched in a door is not.

The penalty for getting it wrong.

Two different consequences, depending on which provision was violated.

1. Failure to comply with the deposit cap, receipt, trust account, or transfer-on-sale rules (RSA 540-A:6, I, II, or III) is deemed a violation of the Consumer Protection Act. That opens the door to the remedies under RSA 358-A, which include attorney's fees and the possibility of enhanced damages for willful conduct.
2. Failure to comply with the interest requirements or the return requirements (RSA 540-A:6, IV or RSA 540-A:7) makes the landlord liable for twice the sum of the deposit plus any interest due, less payments already made and any legitimate charges owed.

Read that again if you're a landlord who's been sitting on a deposit past 30 days. A $1,500 deposit becomes a $3,000 exposure, before fees.

Two protections for landlords are worth knowing. A landlord isn't liable if the failure resulted from the tenant not providing a forwarding address. And a deposit that remains unclaimed six months after the tenancy ends becomes the landlord's property, free of the tenant's claim, absent fraud.

And one protection for tenants: any lease provision purporting to waive these rights is void. You cannot sign these protections away, and a landlord who papers around them has accomplished nothing.

One procedural point people get wrong.

New Hampshire has a well-known expedited remedy sometimes called a "540-A petition" — no filing fee, fast hearing, no lawyer required. It's a genuinely powerful tool.

It applies to the prohibited practices sections of the chapter: illegal lockouts, utility shutoffs, unlawful entry. The security deposit subdivision has its own remedies section, and a deposit dispute generally proceeds differently — often through small claims, or as a Consumer Protection Act claim.

Bringing the wrong action wastes time you may not have. It's worth a call before filing.

Quick Checklists

Landlords, before the next tenancy:

• Confirm whether you're covered — and check whether any tenant is 60 or older
• Add up everything you collect beyond the first month's rent
• Issue the signed receipt, or the written five-day notice if paid by check
• Hold deposits in trust, separate from operating funds
• Calendar the 30-day return deadline the day a tenancy ends
• Keep receipts and invoices for every deduction

Tenants, at move-in and move-out:

• Deliver a written condition list within five days of occupancy, and keep a copy
• Photograph everything, both directions
• Give the landlord a forwarding address in writing
• If 30 days pass with no deposit and no itemized list, the statute is on your side

We represent both landlords and tenants in New Hampshire, including lease drafting, deposit disputes, and eviction matters. See our Landlord/Tenant page, or call (603) 499-7431 for a free 30-minute consultation.