H 8113Real Estate

Property - Residential Landlord and Tenant Act

Landlords with six or more units must hold security deposits in interest-bearing accounts and pay that interest to tenants.

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Introduced Feb 27, 2026Committee House Judiciary

Plain-English Summary

This bill updates the rules for security deposits in Rhode Island for landlords who own six or more residential units. It requires these landlords to place security deposits into federally insured accounts that earn interest at a prevailing market rate. When a tenant moves out, the landlord must return the original security deposit along with any interest earned on that money, minus standard deductions for unpaid rent or damages. The goal is to ensure that tenants, rather than landlords, benefit from the interest accrued on their security funds during their tenancy.

For younger readers

When people rent an apartment, they give the owner extra money called a security deposit to cover any accidents. This bill says that if an owner has many apartments (six or more), they must put that extra money into a bank account that grows over time. When the family moves out, the owner has to give back the extra money plus the extra growth money the bank added to it. This helps the renters get a little bit more money back when they leave their apartment.

Who & Where It Applies

Impacted groups

TenantsLandlords (6+ units)Property Management CompaniesBanking InstitutionsDepartment of Housing

Impacted communities

All

Constitutional & Fiscal Check

None Likely

Estimated cost

None

Estimated revenue

None

Bill Analysis

Both viewpoints

For Progressives

Ensures that the financial gains (interest) generated from a tenant's capital rightfully belong to the tenant rather than enriching the landlord.
Provides a small but meaningful financial boost to renters, who are often lower-income, by mandating they receive the passive income generated by their required deposits.
Increases accountability for larger corporate landlords by requiring them to use federally insured accounts, ensuring tenant funds are protected and separate from operating cash.
Excludes tenants renting from smaller landlords (fewer than six units), creating a two-tiered system where some renters are denied the right to interest on their deposits based solely on who owns their building.
With current savings interest rates being relatively low, the actual monetary benefit to struggling tenants may be negligible, failing to provide substantial economic relief.
Does not address the more pressing issue of the high upfront cost of security deposits, which remains a significant barrier to housing access for the poor.

For Conservatives

Protects small business owners and "mom and pop" landlords by exempting those with fewer than six units from these new banking regulations.
Clarifies property rights regarding funds held in trust, reducing legal ambiguity and potential litigation between landlords and tenants regarding deposit handling.
Requires the use of federally insured accounts, which aligns with prudent financial management and protects assets from mismanagement or fraud.
Imposes new administrative burdens and "red tape" on property owners, requiring them to track and calculate complex interest accruals for individual tenants.
Represents government overreach into private contracts by dictating specific banking arrangements and financial terms between private parties.
May inadvertently drive up rental costs as landlords raise prices to cover the administrative time and accounting fees associated with complying with the new mandate.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 17 additions

SECTION 1. Section 34-18-19 of the General Laws in Chapter 34-18 entitled "Residential Landlord and Tenant Act" is hereby amended to read as follows: 34-18-19. Security deposits.

(a) A landlord may not demand or receive a security deposit, however denominated, in an amount or value in excess of one month’s periodic rent.

(b) Upon termination of the tenancy, the amount of security deposit due to the tenant shall be the entire amount given by the tenant as a security deposit, minus any amount of unpaid accrued rent, the amount due, if any, for reasonable cleaning expenses, the amount due, if any, for reasonable trash disposal expenses and the amount of physical damages to the premises, other than ordinary wear and tear, that the landlord has suffered by reason of the tenant’s noncompliance with § 34-18-24, all as itemized by the landlord in a written notice delivered to the tenant. The landlord shall deliver the notice, together with the amount of the security deposit due to the tenant, within twenty (20) days after the later of either termination of the tenancy, delivery of possession, or the tenant’s providing the landlord with a forwarding address for the purpose of receiving the security deposit.

(1) All security deposits received by a landlord of six (6) or more dwelling units shall be deposited into federally insured deposit accounts earning interest at a rate not less than the prevailing market rate of interest for regular savings accounts as established in § 19-9-2 or another standard adopted by the department of business regulation in concurrence with the department of housing. All interest accrued shall be the property of the tenant.

(2) Upon termination of the tenancy, the amount of security deposit due to the tenant shall be the entire amount given by the tenant as a security deposit, plus all interest accrued, minus any amount of unpaid accrued rent, the amount due, if any, for reasonable cleaning expenses, the amount due, if any, for reasonable trash disposal expenses and the amount of physical damages to the premises, other than ordinary wear and tear, that the landlord has suffered by reason of the tenant's noncompliance with § 34-18-24, all as itemized by the landlord in a written notice delivered to the tenant.

(3) The landlord shall deliver the notice, together with the amount of the security deposit due to the tenant, within twenty (20) days after the latter of either termination of the tenancy, delivery of possession, or the tenant's providing the landlord with a forwarding address for the purpose of receiving the security deposit.

(c) If the landlord fails to comply with subsection (b), the tenant may recover the amount due him or her, together with damages in an amount equal to twice the amount wrongfully withheld, and reasonable attorney fees.

(d) This section does not preclude the landlord or tenant from recovering other damages to which he or she may be entitled under this chapter.

(e) This section does not preclude any landlord who rents a furnished apartment from demanding or receiving a furniture security deposit if the replacement value of the furniture being furnished by the landlord valued at the time the lease is executed is five thousand dollars ($5,000) or greater, in which instance the landlord may charge a separate furniture security deposit of up to one month’s periodic rent.

(f) Upon termination of the tenancy, the amount of furniture security deposit due to the tenant shall be the entire amount given by the tenant as a furniture security deposit, minus the amount due, if any, for reasonable cleaning expenses and repair and the amount of physical damages to the furniture, other than ordinary wear and tear. The landlord shall deliver the notice, together with the amount of the furniture security deposit due to the tenant, within twenty (20) days after the later of either termination of the tenancy, delivery of possession, or the tenant’s providing the landlord with a forwarding address for the purpose of receiving the furniture security deposit.

(g) In the event the landlord transfers his or her interest in the premises, the holder of the landlord’s interest in the premises at the time of the termination of the tenancy is bound by this section.

(h) No rental agreement shall contain any waiver of the provisions of this section.

SECTION 2. This act shall take effect upon passage.