2005 Connecticut Code - Sec. 47a-21. Security deposits.

      Sec. 47a-21. Security deposits. (a) Definitions. As used in this chapter:

      (1) "Commissioner" means the Banking Commissioner.

      (2) "Escrow account" means any account at a financial institution which is not subject to execution by the creditors of the person in whose name such account is maintained and includes a clients' funds account.

      (3) "Escrow agent" means the person in whose name an escrow account, including a clients' funds account, is maintained.

      (4) "Financial institution" means any state bank and trust company, national bank, savings bank, federal savings bank, savings and loan association, and federal savings and loan association that is located in this state.

      (5) "Forwarding address" means the address to which a security deposit may be mailed for delivery to a former tenant.

      (6) "Landlord" means any landlord of residential real property, and includes (A) any receiver; (B) any person who is a successor to a landlord or to a landlord's interest; and (C) any tenant who sublets his premises.

      (7) "Receiver" means any person who is appointed or authorized by any state, federal or probate court to receive rents from tenants, and includes trustees, executors, administrators, guardians, conservators, receivers, and receivers of rent.

      (8) "Rent receiver" means a receiver who lacks court authorization to return security deposits and to inspect the premises of tenants and former tenants.

      (9) "Residential real property" means real property containing one or more residential units, including residential units not owned by the landlord, and containing one or more tenants who paid a security deposit.

      (10) "Security deposit" means any advance rental payment other than an advance payment for the first month's rent and a deposit for a key or any special equipment.

      (11) "Successor" to a landlord or to a landlord's interest means any person who succeeds to a landlord's interest whether by purchase, foreclosure or otherwise and includes a receiver.

      (12) "Tenant" means a tenant, as defined in section 47a-1, or a resident, as defined in section 21-64.

      (13) "Tenant's obligations" means (A) the amount of any rental or utility payment due the landlord from a tenant; and (B) a tenant's obligations under the provisions of section 47a-11.

      (b) Amount of security deposit. (1) In the case of a tenant under sixty-two years of age, a landlord shall not demand a security deposit in an amount or value in excess of two months' periodic rent which may be in addition to the current month's rent.

      (2) In the case of a tenant sixty-two years of age or older, a landlord shall not demand a security deposit in an amount or value in excess of one month's periodic rent, which may be in addition to the current month's rent. Upon the request of a tenant sixty-two years of age or older, any landlord who has received from such tenant a security deposit in an amount or value in excess of one month's periodic rent shall refund to such tenant the portion of such security deposit that exceeds one month's periodic rent.

      (c) Exemption from attachment and execution. Assignment to successor. Any security deposit paid by a tenant shall remain the property of such tenant in which the landlord and his successor shall have a security interest, as defined in subsection (37) of section 42a-1-201, to secure such tenant's obligations. A security deposit shall be exempt from attachment and execution by the creditors of the landlord or his successor and shall not be considered part of the estate of the landlord or his successor in any legal proceeding. Any voluntary or involuntary transfer of a landlord's interest in residential real estate to a successor shall constitute an assignment to such successor of such landlord's security interest in all security deposits paid by tenants of such transferred residential real estate.

      (d) Payment of security deposit and interest at termination of tenancy. (1) Within the time specified in subdivisions (2) and (4) of this subsection, the person who is the landlord at the time a tenancy is terminated, other than a rent receiver, shall pay to the tenant or former tenant: (A) The amount of any security deposit that was deposited by the tenant with the person who was landlord at the time such security deposit was deposited less the value of any damages which any person who was a landlord of such premises at any time during the tenancy of such tenant has suffered as a result of such tenant's failure to comply with such tenant's obligations; and (B) any accrued interest due on such security deposit as required by subsection (i) of this section. If the landlord at the time of termination of a tenancy is a rent receiver, such rent receiver shall return security deposits in accordance with the provisions of subdivision (3) of this subsection.

      (2) Upon termination of a tenancy, any tenant may notify his landlord in writing of such tenant's forwarding address. Within thirty days after termination of a tenancy, each landlord other than a rent receiver shall deliver to the tenant or former tenant at such forwarding address either (A) the full amount of the security deposit paid by such tenant plus accrued interest as provided in subsection (i) of this section, or (B) the balance of the security deposit paid by such tenant plus accrued interest as provided in subsection (i) of this section after deduction for any damages suffered by such landlord by reason of such tenant's failure to comply with such tenant's obligations, together with a written statement itemizing the nature and amount of such damages. Any such landlord who violates any provision of this subsection shall be liable for twice the amount or value of any security deposit paid by such tenant, except that, if the violation is the failure to deliver the accrued interest, such landlord shall only be liable for twice the amount of such accrued interest.

      (3) (A) Any receiver who is authorized by the court appointing him receiver to return security deposits and to inspect the premises of any tenant shall pay security deposits and interest in accordance with the provisions of subdivisions (1) and (2) of this subsection from the operating income of such receivership to the extent that any such payments exceed the amount in any escrow accounts for such tenants. (B) Any rent receiver shall present any claim by any tenant for return of a security deposit to the court which authorized him to be a rent receiver. Such court shall determine the validity of any such claim and shall direct such rent receiver to pay from the escrow account or from the operating income of such property the amount due such tenant as determined by such court.

      (4) Any landlord who does not have written notice of his tenant's or former tenant's forwarding address shall deliver any written statement and security deposit due to the tenant, as required by subdivision (2) of this subsection, within the time required by subdivision (2) of this subsection or within fifteen days after receiving written notice of such tenant's forwarding address, whichever is later.

      (e) Liability of receiver and successor to landlord's interest in property re payment of security deposit. A successor, other than a receiver, to a landlord's interest in residential real property shall be liable for the claims of tenants of such property for return of any part of such security deposit which is or becomes due to such tenant during the time such successor is a landlord. A receiver's liability for payment of security deposits and interest under this section shall be limited to the balance in any escrow account for such tenants maintained by such receiver in such receivership in accordance with subsection (h) of this section and to the operating income generated in such receivership.

      (f) Nonresident landlord. Any landlord who is not a resident of this state shall appoint in writing the Secretary of the State as his attorney upon whom all process in any action or proceeding against such landlord may be served.

      (g) Action to reclaim security deposit. Any person may bring an action in replevin or for money damages in any court of competent jurisdiction to reclaim any part of his security deposit which may be due. This section does not preclude the landlord or tenant from recovering other damages to which he may be entitled.

      (h) Escrow deposit. (1) Each landlord shall immediately deposit the entire amount of all security deposits received by him on or after October 1, 1979, from his tenants into one or more escrow accounts for such tenants in a financial institution. Such landlord shall be escrow agent of such account. Within seven days after a written request by the commissioner for the name of each financial institution in which any such escrow accounts are maintained and the account number of each such escrow account, a landlord shall deliver such requested information to the commissioner.

      (2) Each landlord and each successor to the landlord's interest shall maintain each such account as escrow agent and shall not withdraw the amount of any security deposit or accrued interest on such amount, as provided in subsection (i) of this section, that is in any escrow account from such account except as provided in this section.

      (3) (A) Whenever any real estate is voluntarily or involuntarily transferred from a landlord, other than a receiver, to his successor, including a receiver, such landlord shall withdraw from the escrow account and deliver to his successor the entire amount of security deposits paid by tenants of the property being transferred, plus accrued interest provided for in subsection (i) of this section. If at the time of transfer of such real estate the funds in such account are commingled with security deposits paid by tenants in real estate not being transferred to such successor, and if at such time the funds in such account are less than the amount of security deposits paid by all tenants whose security deposits are contained in such account, such landlord shall deliver to such successor a pro rata share of security deposits paid by tenants of the real estate being transferred to such successor. Any successor to a landlord shall immediately deposit the entire amount of funds delivered to him in accordance with this subdivision into an escrow account as provided in subdivision (l) of this subsection and shall maintain such account as escrow agent in accordance with the provisions of this section. (B) Whenever any real estate is transferred from a receiver to his successor, such receiver shall dispose of the escrow accounts as ordered by the court which appointed him receiver. The order of such court shall provide for the priority of the present and future rights of tenants to security deposits paid by them over the rights of any secured or unsecured creditor of any person and shall provide that the funds in such account shall be delivered to the successor of such receiver for immediate deposit in an escrow account for tenants who paid security deposits.

      (4) No person shall withdraw funds from any escrow account except as follows: (A) Within the time specified in subsection (d) of this section, each escrow agent shall withdraw and disburse the amount of any security deposit due to any tenant upon the termination of such tenancy, in accordance with subsection (d) of this section, together with accrued interest thereon as provided in subsection (i) of this section. (B) At the time provided for in subsection (i) of this section, each escrow agent shall withdraw from such account and pay to each tenant any accrued interest due and payable to any tenant in accordance with the provisions of said subsection. (C) The escrow agent may withdraw and personally retain interest credited to and not previously withdrawn from such account to the extent such interest exceeds the amount of interest being earned by tenants as provided in subsection (i) of this section. (D) The escrow agent may withdraw and personally retain the amount of damages withheld, in accordance with the provisions of subsection (d) of this section, from payment of a security deposit to a tenant. (E) The escrow agent may at any time during a tenancy withdraw and pay to a tenant all or any part of a security deposit together with accrued interest on such amount as provided in subsection (i) of this section. (F) The escrow agent shall withdraw and disburse funds in accordance with the provisions of subdivision (3) of this subsection. (G) The escrow agent may transfer any escrow account from one financial institution to another and may transfer funds from one escrow account to another provided that all security deposits in escrow accounts remain continuously in escrow accounts.

      (i) Payment of interest on security deposits. (1) On and after July 1, 1993, each landlord other than a landlord of a residential unit in any building owned or controlled by any educational institution and used by such institution for the purpose of housing students of such institution and their families, and each landlord or owner of a mobile manufactured home or of a mobile manufactured home space or lot or park, as such terms are defined in subdivisions (1), (2) and (3) of section 21-64, shall pay interest on each security deposit received by him at a rate of not less than the average rate paid, as of December 30, 1992, on savings deposits by insured commercial banks as published in the Federal Reserve Board Bulletin rounded to the nearest one-tenth of one percentage point, except in no event shall the rate be less than one and one-half per cent. On and after January 1, 1994, the rate for each calendar year shall be not less than the deposit index, as defined in subdivision (2) of this subsection, for that year, except in no event shall the rate be less than one and one-half per cent. On the anniversary date of the tenancy and annually thereafter, such interest shall be paid to the tenant or resident or credited toward the next rental payment due from the tenant or resident, as the landlord or owner shall determine. If the tenancy is terminated before the anniversary date of such tenancy, or if the landlord or owner returns all or part of a security deposit prior to termination of the tenancy, the landlord or owner shall pay the accrued interest to the tenant or resident within thirty days of such termination or return. In any case where a tenant or resident has been delinquent for more than ten days in the payment of any monthly rent, he shall forfeit any interest which would otherwise be payable to him for that month, except that there shall be no such forfeiture if, pursuant to a provision of the rental agreement, a late charge is imposed for failure to pay such rent within the time period provided by section 47a-15a. No landlord or owner shall increase the rent due on any quarters or property subject to the provisions of this section because of the requirement that interest be paid on any security deposit made with respect to such quarters or property.

      (2) The commissioner shall publish the rate that takes effect July 1, 1993, in the Department of Banking news bulletin no later than July 15, 1993. The deposit index for each calendar year shall be equal to the average rate paid on savings deposits by insured commercial banks as last published in the Federal Reserve Board Bulletin in November of the prior year. The commissioner shall determine the deposit index for each calendar year and publish such deposit index in the Department of Banking news bulletin no later than December fifteenth of the prior year. The commissioner shall also cause such rates to be disseminated in a manner designed to come to the attention of landlords and tenants including, but not limited to, the issuance of press releases and public service announcements, the encouragement of news stories in the mass media and the posting of conspicuous notices at financial institutions. For purposes of this subsection, "Federal Reserve Board Bulletin" means the monthly survey of selected deposits published as a special supplement to the Federal Reserve Statistical Release Publication H.6 published by the Board of Governors of the Federal Reserve System or, if such bulletin is superseded or becomes unavailable, a substantially similar index or publication.

      (j) Investigation of complaints by commissioner. Order. Enforcement. Regulations. (1) The commissioner may receive and investigate complaints regarding any alleged violation of subsections (b), (d), (h) or (i) of this section, provided the commissioner shall not have jurisdiction over the refusal or other failure of any landlord to return all or part of a security deposit if such failure results from the landlord's good faith claim that the landlord has suffered damages as a result of a tenant's failure to comply with such tenant's obligations whether or not the existence or amount of alleged damages is disputed by the tenant. For purposes of this section a good faith claim is deemed to be a claim for actual damages suffered by the landlord for which written notification of such damages has been given to the tenant in accordance with the provisions of subdivisions (1), (2) and (4) of subsection (d) of this section. For the purposes of such investigation, any person who is or was a landlord shall be subject to the provisions of section 36a-17.

      (2) If the commissioner determines that any landlord has violated any provision of this section over which the commissioner has jurisdiction, the commissioner may, in accordance with section 36a-52, order such person to cease and desist from such practices and to comply with the provisions of this section.

      (3) The commissioner may adopt regulations, in accordance with chapter 54, to carry out the purposes of this section.

      (k) Penalties. (1) Any person who is a landlord at the time of termination of a tenancy and who knowingly and wilfully fails to pay all or any part of a security deposit when due shall be subject to a fine of not more than two hundred fifty dollars for each offense, provided it shall be an affirmative defense under this subdivision that such failure was caused by such landlord's good faith belief that he was entitled to deduct the value of damages he has suffered as a result of such tenant's failure to comply with such tenant's obligations.

      (2) Any person who knowingly and wilfully violates the provisions of subsection (h) of this section on or after October 1, 1979, shall be subject to a fine of not more than five hundred dollars or imprisonment of not more than thirty days or both for each offense. It shall be an affirmative defense under the provisions of this subdivision that at the time of the offense, such person leased residential real property to fewer than four tenants who paid a security deposit.

      (3) Any person who is a landlord at the time an interest payment is due under the provisions of subsection (i) of this section and who knowingly and wilfully violates the provisions of such subsection shall be subject to a fine of not more than one hundred dollars for each offense.

      (4) No financial institution shall be liable for any violation of this section except for any violation in its capacity as a landlord or successor to a landlord's interest.

      (l) Rights not limited. Nothing in this section shall be construed as a limitation upon: (1) The power or authority of the state, the Attorney General or the commissioner to seek administrative, legal or equitable relief permitted by the general statutes or at common law; or (2) the right of any tenant to bring a civil action permitted by the general statutes or at common law.

      (P.A. 76-95, S. 5, 27; 76-435, S. 75, 82; P.A. 77-451, S. 3; P.A. 79-559, S. 1; P.A. 80-483, S. 171, 186; P.A. 81-322, S. 8; P.A. 82-162, S. 4; 82-246, S. 1; 82-249; June Sp. Sess. P.A. 83-3, S. 1; P.A. 84-84, S. 1, 2; 84-504, S. 2, 3; 84-546, S. 105, 166, 173; P.A. 85-231; 85-613, S. 74, 154; P.A. 87-9, S. 2, 3; 87-154, S. 1; 87-348; P.A. 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; P.A. 91-383, S. 17; P.A. 92-4, S. 1; P.A. 93-40; 93-41, S. 2, 3; 93-142, S. 4, 7, 8; 93-339, S. 1, 2; 93-435, S. 18, 95; P.A. 94-122, S. 337, 340; P.A. 96-74, S. 8; 96-271, S. 216, 254; P.A. 03-84, S. 36.)

      History: P.A. 76-435 revised effective date section of P.A. 76-95, see history for Sec. 47a-1; P.A. 77-451 specified in Subsec. (b) that landlord may deduct amount of rent due and owing; P.A. 79-559 essentially replaced existing provisions; P.A. 80-483 substituted "judicial district of Hartford-New Britain" for "Hartford county" in Subsec. (j)(2); P.A. 81-322 made technical change; P.A. 82-162 amended Subsec. (i), applying provisions to owners and residents of mobile home parks as well as to landlords and tenants under previously existing provisions; P.A. 82-246 amended Subsec. (i) to increase interest from four per cent to five and one-quarter per cent and to provide that a tenant who makes a late rent payment loses interest for the month of the late payment only where previously all interest was lost; P.A. 82-249 amended Subsec. (b) to add subdivision (2) providing for a smaller maximum security deposit for persons sixty-two years of age or older who meet certain income requirements, amending previous provisions accordingly; June Sp. Sess. P.A. 83-3 changed term "mobile home" to "mobile manufactured home" in Subsec. (i); P.A. 84-84 amended Subdiv. (12) of Subsec. (a) to include utility payments due the landlord in the definition of "tenant's obligations", amended Subsec. (i) to change the word "lease" to "tenancy" and amended Subsec. (j) to define a good faith claim; P.A. 84-504 amended Subsec. (b) to delete income limitations which qualified tenants sixty-two years of age or older for a maximum security deposit of one month's rent, effective with respect to any term of tenancy commencing on or after October 1, 1984; P.A. 84-546 made technical change in Subdiv. (1) of Subsec. (d) and changed effective date of P.A. 84-504 from October 1, 1985, to October 1, 1984; P.A. 85-231 amended Subdiv. (2) of Subsec. (b) to delete limitation that prohibited a landlord demanding a security deposit in excess of one month's rent "for any term of tenancy commencing on or after October 1, 1984" and to require a landlord who has received a security deposit from a tenant sixty-two years of age or older in excess of one month's rent to refund such excess upon the request of the tenant; P.A. 85-613 made technical changes in Subsec. (j); pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the Revisors to "commissioner of banking"; P.A. 87-154 amended Subsec. (i) to provide that a tenant will not forfeit interest for being delinquent if pursuant to the rental agreement a late charge is imposed for failure to pay rent within the statutory grace period; P.A. 87-348 amended Subdiv. (2) of Subsec. (d) by replacing provision which required a landlord to deliver a written notification of damages within thirty days and the balance of the security deposit plus accrued interest and an itemized statement of damages within sixty days after termination of tenancy with a provision requiring the return of the balance of the security deposit plus accrued interest after deduction for damages together with an itemized statement of damages within thirty days after termination of tenancy; P.A. 88-230 replaced "judicial district of Hartford-New Britain" with "judicial district of Hartford", effective September 1, 1991; P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; P.A. 91-383 amended Subsec. (a) by replacing "As used in this section" with "As used in this chapter", replacing in the definition of "landlord" the words "living quarters in residential real property" with "residential real property", adding in the definition of "residential real property" the words "including residential units not owned by the landlord", and adding the definition of "tenant"; P.A. 92-4 amended Subsec. (i) to require interest at the rate of four per cent on and after October 1, 1992, and at the rate of five and one-quarter per cent on and after October 1, 1994; P.A. 93-40 amended Subsec. (c) to provide that a security deposit is exempt from attachment and execution by the landlord's creditors and is not part of the landlord's estate; P.A. 93-41 amended Subsec. (j) to give the banking commissioner authority to receive and investigate complaints about violations of the law limiting the amount of security deposit a landlord can demand, effective May 5, 1993; P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 93-339 amended Subsec. (i) by requiring that on and after July 1, 1993, the interest rate be not less than the average rate paid as of December 30, 1992, on savings deposits by insured commercial banks and that on and after January 1, 1994, the interest rate for each calendar year be not less than the deposit index, with a minimum rate of one and one-half per cent, and by adding Subdiv. (2) to require the commissioner to publish the rate that takes effect July 1, 1993, no later than July 15, 1993, and to determine and publish the deposit index for each calendar year no later than December fifteenth of the prior year and disseminate the rates in a manner designed to come to the attention of landlords and tenants, effective July 1, 1993; P.A. 93-435 amended Subsec. (i) by making a technical change, effective June 28, 1993; (Revisor's note: In 1995 the word "subsections" in Subsec. (j)(1) before the words "(d), (h) or (i) of this section" was changed editorially by the Revisors to "subsection"); P.A. 94-122 amended Subsec. (j) by subjecting landlords to the provisions of Sec. 36a-17 in Subdiv. (1), authorizing the commissioner to issue cease and desist orders under Sec. 36a-52, deleting the hearing provisions in Subdiv. (2), and making technical changes, effective January 1, 1995; P.A. 96-74 amended Subsec. (d) to add in Subdiv. (2) provision limiting the liability of the landlord to twice the amount of the accrued interest when the violation is the failure to deliver such accrued interest; P.A. 96-271 amended Subsec. (f) to delete provision that specified "foreign corporation" as used in Subsecs.(a) and (c) of Sec. 33-400 includes any such landlord, effective January 1, 1997; P.A. 03-84 changed "Commissioner of Banking" to "Banking Commissioner" in Subsec. (a)(1), effective June 3, 2003.

      Cited. 32 CA 133, 136.

      Cited. 39 CS 289, 294. Cited. 44 CS 544.

      Subsec. (b):

      Cited. 35 CS 126, 128.

      Subsec. (c):

      Relates only to residential real property and, therefore, is inapplicable to case concerning commercial property. 74 CA 460.

      Subsec. (d):

      Subdiv. (2) cited. 5 CA 118, 119, 121, 123. Subdiv. (2) cited. 44 CA 381. Subdiv. (2) cited. 45 CA 686. Because plaintiff did not provide defendant with a forwarding address, as is required by the clear langauge of this section, court properly granted defendant's motion to strike in regard to a claim for double damages. 80 CA 155.

      Cited. 37 CS 27, 37.

      Subsec. (i):

      Cited. 45 CA 686.