North Dakota Security Deposit Interest

Does North Dakota require interest on security deposits?

Yes, when the tenancy lasts nine months or longer. Under NDCC § 47-16-07.1, a landlord who collects a security deposit must put the money in a federally insured interest-bearing savings or checking account for the benefit of the tenant. The statute sets no interest rate. The tenant is owed the interest that account actually earns, and the landlord does not have to pay interest if the occupancy lasted less than nine months.

How North Dakota deposit interest is calculated

There is no formula in the statute. The interest owed is whatever the federally insured account earned on the deposit while you held it, so it depends on the account and the bank's rate. The interest accrues from the day the deposit goes into the account, but you only owe it to the tenant if the occupancy lasted nine months or longer. The deposit and any accrued interest are paid to the tenant when the lease ends.

North Dakota's federally insured account requirement

Unlike many states that allow commingling, North Dakota requires the deposit to be held in a federally insured interest-bearing savings or checking account for the benefit of the tenant. A non-interest account, or depositing the money into your operating account, does not meet NDCC § 47-16-07.1.

What happens if a North Dakota landlord doesn't pay required interest

Under NDCC § 47-16-07.1, a landlord is liable for treble damages for any security deposit money withheld without reasonable justification, and that includes interest the tenant is owed. The tenant can recover three times the amount withheld. The treble-damage provision makes North Dakota one of the more punitive states for deposit violations.

Worked example: calculating deposit interest in North Dakota

You hold a $2,000 security deposit for a tenant who has lived in your North Dakota rental for 2 years (24 months). Because the occupancy lasted longer than nine months, the tenant is owed the interest the account earned.

If the savings account paid 1.0% a year, simple interest would be about $2,000 x 1.0% x 2 years = $40.00. That rate is only an example. The figure you owe is the interest shown on your bank statements for that deposit.

Keeping each deposit traceable in the account makes this easy: pull the interest credited while you held it and return it with the deposit.

What experienced landlords do differently

• Open a dedicated interest-bearing account before collecting your first deposit. Commingling deposits with operating funds does not meet NDCC § 47-16-07.1 and is a common violation.
• Keep the bank statements that show interest credited on each deposit. They are your proof of the amount owed if a tenant questions it.
• Track each deposit in its own line item. If you manage multiple units, a simple spreadsheet with deposit date, amount, account number, and interest paid keeps you audit-ready.

Related North Dakota compliance tools

Landlords in North Dakota deal with more than just deposit interest. These free calculators cover the other compliance deadlines you need to track:

• North Dakota Eviction Timeline Estimator: Estimate the full eviction process from notice to possession
• North Dakota Maximum Late Fee Calculator: Calculate the highest late fee your lease can enforce
• North Dakota Rent Increase Notice Calculator: Find the required notice period for your planned increase
• North Dakota Security Deposit Return Deadline: Know exactly when the deposit must be returned or itemized

See all property management tools for investment, financing, and operations calculators.

Frequently asked questions about North Dakota deposit interest

What if I forgot to put the deposit in a separate account?

Fix it immediately: open a compliant account and deposit the funds. Going forward, document the correction. NDCC § 47-16-07.1 requires the account, so the sooner you correct it, the better your legal position if the issue comes up.

What is the North Dakota deposit interest rate?

There is no statutory rate. The deposit must sit in a federally insured interest-bearing savings or checking account, and the tenant is owed the interest that account earns if the occupancy lasted nine months or longer.

When is North Dakota deposit interest owed?

Interest accrues in the account from the day the deposit goes in, but the landlord only has to pay it if the occupancy lasted nine months or longer. It is paid with the deposit when the lease ends.

Does North Dakota require a separate account for deposits?

Yes. NDCC § 47-16-07.1 requires the deposit to be held in a federally insured interest-bearing savings or checking account for the benefit of the tenant.

What are the penalties for not paying deposit interest in North Dakota?

A landlord is liable for treble damages (three times the amount) for any security deposit money withheld without reasonable justification under NDCC § 47-16-07.1, and that includes interest owed.