Minnesota · §504B.178Minnesota tenant security deposits when a rental property is sold

Minnesota's deposit statute has a specific procedure for a sale. Under Minnesota Statutes §504B.178, subdivision 5, when the landlord's interest ends – by sale, assignment, death, a receivership or otherwise – the landlord or its agent must, within 60 days or when the successor must return or account for the deposit, whichever comes first, either transfer the deposit (or what's left after lawful deductions) with interest to the successor and then notify the tenant of the transfer and the transferee's name and address, or return it to the tenant; either step releases the old landlord. Under subdivision 6, the successor takes on all of the landlord's rights and obligations for the deposit – but if the tenant doesn't object 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 and may be given by mail or personal service. The rules the buyer inherits: deposits earn 1% simple interest; within three weeks after the tenancy ends (and after receiving the tenant's mailing address) the landlord returns the deposit with interest or gives a written statement of the specific reasons for withholding; deductions are limited to unpaid rent and other amounts due under an agreement, and restoring the unit beyond ordinary wear and tear. A landlord who misses these duties – including the transfer or return on a sale – owes a penalty equal to the amount withheld plus interest, and bad-faith retention can add punitive damages of up to $500 per deposit (subd. 4, 7).