Security Deposit Alternative in Minnesota
Minnesota gives you three weeks after a tenancy ends to return the deposit with interest, or to send a written statement giving the specific reason you are holding any of it back. Deposits earn the resident 1 percent a year while you have them. Hold money in bad faith and you owe punitive damages of up to $500 per deposit on top of everything else, and bad faith is presumed if you missed the deadline and do not return the money within two weeks of the resident starting an action.
What Minnesota law says about security deposits
Read from the Minnesota statute on 2026-09-09. Deposit rules change, and this is general information rather than legal advice. Confirm the current text with your own counsel before you change a lease.
Can you require it of every Minnesota resident?
Minnesota has no statute written for a monthly fee charged instead of a deposit, and one feature of the deposit law shapes how carefully the structure has to be drawn. Subdivision 1 applies the section to any deposit of money whose function is to secure performance of the rental agreement, other than money that is purely an advance payment of rent. That is a test of what a charge does rather than what the lease calls it, so a charge that behaves like a deposit is treated as one. Offering residents a genuine choice is straightforward. Writing the fee into every lease as a requirement is a conversation with your own attorney.
Rules differ by state and by city, and subsidized housing is its own question. This is general information for property managers, not legal advice. Get a written opinion before you make the fee a condition of tenancy anywhere.
How the program works in Minnesota
The mechanics are the same in every state Beagle operates in. The program is designed to comply with applicable state and local regulations, and the rate is set by the deposit amount rather than by geography, so a Minnesota property and one two states over are quoted the same way.
The resident chooses at signing
Instead of producing the full deposit, the resident pays a smaller non-refundable monthly fee that is billed with rent. Nothing is held, so nothing has to be returned.
The property keeps its protection
Damage beyond normal wear is reimbursed up to the deposit amount the unit would otherwise have required, so what you can recover does not shrink.
Move-out stops being a negotiation
A claim is filed against the program rather than deducted from money you are holding, which takes the itemised-deduction letter and the dispute that follows it off your team's desk.
You earn on every resident who takes it
You set an administrative fee on top of the premium, up to $5 per unit per month, and keep it.
Minnesota security deposit alternative FAQs
Minnesota has no statute answering that, so a mandatory version is a question for your own attorney. One thing to put in front of them: section 504B.178 governs any deposit whose function is to secure performance of the rental agreement, other than an advance payment of rent, so what a charge does matters more than what the lease calls it.
Security deposit rules in other states
See it on your Minnesota units
Run the program against your own unit count, or walk through it with our team. No upfront fees, no onboarding charges, no long-term contracts.