Most residential landlords require tenants to pay a security deposit to cover any repairs needed when the tenant moves out, or to cover the tenant’s failure to pay the last month's rent.

Laws vary from state to state, but many states have statutes that provide the maximum amount of security deposit a landlord may require for a residential lease and the costs for which the landlord may use the security deposit (cleaning, repairs, unpaid rent) following termination of the lease.

These laws also provide a specific deadline (often 30-60 days) for the landlord to return the tenant’s security deposit following termination of the lease—after deducting any amount properly withheld, as allowed by law.

In Montana, the Residential Landlord and Tenant Act of 1977 governs the collection, holding, and return of security deposits for residential leases. According to Montana Code Annotated (MCA) § 70-25-201 et seq., a landlord may not demand or receive a security deposit in excess of one month's rent unless the tenant agrees to a higher deposit to accommodate pets, changes to the premises, or other reasons. The landlord is permitted to use the security deposit for unpaid rent, damages beyond normal wear and tear, and cleaning costs necessary to return the rental unit to its initial condition, minus reasonable wear and tear. Upon termination of the lease, the landlord has 10 days to return the security deposit if there are no deductions. If deductions are made, the landlord must provide an itemized list of deductions and return the remaining deposit within 30 days. Failure to comply with these requirements can result in the landlord being liable to the tenant for damages as prescribed by MCA § 70-25-202.