Iowa · Code §562A.12Iowa tenant security deposits when you sell a rental

Iowa's landlord-tenant law sets a procedure for deposits on a sale. When the landlord's interest in the dwelling ends, the landlord or its agent must, within a reasonable time, either transfer the deposit – or what's left after lawful deductions – to the successor and notify the tenant of the transfer and the transferee's name and address, or return it to the tenant; doing so releases the landlord from further liability for the deposit (Iowa Code §562A.12(5)). The successor then has all of the landlord's rights and obligations for the deposits – but if the tenant doesn't object to the stated amount within 20 days after written notice of the amount being transferred or assumed, the successor's obligation is limited to that amount; the notice must include a stamped envelope addressed to the successor (§562A.12(6)). The rules the buyer inherits: no more than two months' rent as a deposit, held in a federally insured bank, savings and loan or credit union and not commingled; within 30 days after the tenancy ends and the landlord receives the tenant's mailing address, return the deposit or give a written statement of the specific reasons for withholding – or forfeit the right to withhold; and bad-faith retention can bring punitive damages of up to twice the monthly rent on top of actual damages (§562A.12(1)–(4), (7)).