North Dakota Security Deposit Interest

North Dakota security deposit interest rules at a glance

North Dakota is one of the states that requires landlords to pay interest on security deposits. Under NDCC § 47-16-07.1, if a tenancy lasts nine months or longer, the landlord must pay simple interest on the deposit at the Federal Reserve discount rate as of January 1 of each year. The deposit itself must be held in a federally insured interest-bearing savings or checking account for the duration of the tenancy.

When the interest obligation kicks in

The nine-month threshold is measured from the start of occupancy. If a tenant moves in on January 1 and moves out on September 30 of the same year, the landlord owes interest. If the tenant vacates before nine months, no interest is owed. For month-to-month tenancies that roll past the nine-month mark, interest accrues from the original move-in date, not from the date the tenancy converted to month-to-month.

How to calculate the interest rate

North Dakota ties the rate to the Federal Reserve discount rate as of January 1 of each year. This is a variable rate that changes annually. The calculation uses simple interest (not compound), applied to the full deposit amount for the number of months held. Because the rate resets each January 1, a multi-year tenancy may span different rate periods. Most landlords apply a single blended rate for simplicity, though the statute technically contemplates the rate as of each January 1.

Account requirements for North Dakota deposits

The deposit must be held in a federally insured interest-bearing savings or checking account. The landlord may commingle deposits from multiple tenants in a single account, but the account must be interest-bearing and federally insured. Failure to hold the deposit in a qualifying account can be treated as bad faith under the treble-damages provision of NDCC § 47-16-07.1.

How to use this calculator

Enter the deposit amount and the number of months the deposit has been held. The calculator determines whether North Dakota requires interest and, if so, estimates the interest owed based on the statutory rate. The actual rate varies each year based on the Federal Reserve discount rate, so confirm the current rate before finalizing calculations.

Frequently asked questions about North Dakota deposit interest

Does North Dakota require landlords to pay interest on security deposits?

Yes, if the tenancy lasts nine months or longer. The landlord must pay simple interest at the Federal Reserve discount rate as of January 1 of each year (NDCC § 47-16-07.1). If the tenancy is shorter than nine months, no interest is owed.

What interest rate applies to North Dakota security deposits?

The rate is the Federal Reserve discount rate as of January 1 of each year. This is a variable rate that changes annually. The interest is calculated as simple interest (not compound) on the full deposit amount.

Where must a North Dakota landlord hold the security deposit?

In a federally insured interest-bearing savings or checking account (NDCC § 47-16-07.1). The account must be interest-bearing and insured by the FDIC or NCUA. Failure to comply can support a bad-faith claim under the statute.

Does the interest obligation apply to month-to-month tenancies?

Yes, once the cumulative occupancy reaches nine months. The nine-month threshold runs from the original move-in date, regardless of whether the tenancy converted from a fixed-term lease to month-to-month during that period.

What happens if a North Dakota landlord fails to pay deposit interest?

Failure to pay required interest can be considered part of a bad-faith retention claim under NDCC § 47-16-07.1, which carries treble damages plus attorney fees. The safest practice is to calculate and include the interest with the deposit refund at the end of the tenancy.