Does a landlord have to pay interest on a security deposit in South Dakota?
South Dakota requires no interest on a residential security deposit, and a 2026 amendment to the very section that gives the money back left it that way.
Cited to S.D. Codified Laws § 43-32-6.1 (definition and maximum security deposit) and 2 more cited sources · Verified August 28, 2026
SDCL § 43-32-6.1 defines the deposit and caps it at one month's rent, unless the lessor and lessee agree on more 'where special conditions pose a danger to maintenance of the premises,' and § 43-32-24 requires the lessor to return it, or furnish a written statement showing the specific reason for withholding it, within twenty-one days of the tenancy ending and the tenant's mailing address or delivery instructions arriving. Session Laws 2026, chapter 179 rewrote that return section — it produced the twenty-one-day clock and added 'other funds due to the landlord pursuant to an agreement' as a withholding ground — and added no interest and no account duty. Nothing in chapter 43-32 tells a landlord where to hold a deposit. The chapter's only separate-account rule belongs to the tenant: under § 43-32-9 a lessee facing repairs the lessor will not make may withhold rent and put it in a separate bank or savings and loan account until the work is done. The word 'interest' appears twice in the whole chapter, both times meaning an interest in land.
South Dakota deposit interest at a glance
| Interest owed to the tenant | No — no statute addresses it |
|---|---|
| How the rate is set | No rate exists — there is no interest duty |
| Current figure | No published figure exists |
| Rate rules | No rate rules — no duty exists |
| Accrual and payment | No payment duty exists |
| Who and what is covered | No statutory conditions stated — see the summary and notes |
| Statute controls where or how the deposit is held | No statute addresses how the deposit is held |
| Interest-bearing account required | No statute addresses whether the account must bear interest |
| Custody rules | No statute addresses custody of the deposit |
| Penalty for violation | No statutory penalty reaches an interest violation specifically |
| Local rules | None noted for this state |
Cite this page: "Landlord Atlas, South Dakota Security Deposit Interest Laws (verified August 28, 2026), landlordatlas.com/laws/deposit-interest/south-dakota/" — free to cite and quote with a link (how these records are verified). Everything above is cited in the citations section below.
Check the verified South Dakota answer — and every state and city that differs — in the deposit interest calculator — free, no signup, built on the same verified South Dakota law as this page.
Notes and caveats
- A 2026 amendment is the strongest evidence — Section 43-32-24's source line reads SL 1976, ch 267, § 3; SL 1984, ch 281, § 1; SL 2026, ch 179, § 1. The legislature reopened South Dakota's deposit-return section in 2026, shortened the clock, and added a withholding ground — and wrote no interest requirement and no custody rule into it. The answer here is a recent legislative choice, not an old statute nobody has looked at.
- The one 'separate account' in the chapter is the tenant's, not the landlord's — Section 43-32-9 lets a lessee whose necessary repairs would cost more than one month's rent withhold the rent, after written notice stating the specific reason, and 'immediately deposit it in a separate bank or savings and loan account,' with written evidence to the lessor, held only for making the repairs until the lessor does the work or enough money accumulates for the lessee to have it done. The tenant opens the account, the tenant funds it, and the landlord is the eventual payee. A summary that finds the phrase and assigns it to the landlord invents a segregation duty South Dakota does not impose.
- Commercial deposits get the same answer — Section 43-32-24.1 governs deposits on commercial premises with a sixty-day return, and it likewise carries no interest and no account duty. The three deposit-relevant sections of the chapter are 43-32-6.1, 43-32-24, and 43-32-24.1, and none of them mentions interest.
- The penalty is capped at $200 — Under § 43-32-24 a lessor who fails to comply forfeits all rights to withhold any part of the deposit, and bad-faith retention, or a bad-faith failure to provide the written statement or the itemized accounting a lessee may request within forty-five days, exposes the lessor to punitive damages 'not to exceed two hundred dollars.' South Dakota has no doubling or trebling provision here.
Common questions: South Dakota deposit interest
Each answer is the verified value from the table above, restated as a direct answer. Free to quote with a link to this page.
- What is the South Dakota security deposit interest rate right now?
- No published figure exists.
- When must a landlord pay or credit deposit interest in South Dakota?
- No payment duty exists.
- Does the deposit have to be in an interest-bearing account in South Dakota?
- No statute addresses whether the account must bear interest.
- What happens if a landlord does not pay deposit interest in South Dakota?
- No statutory penalty reaches an interest violation specifically.
- Do any cities or counties in South Dakota have their own deposit-interest rules?
- None noted for this state.
Citations
- S.D. Codified Laws § 43-32-6.1 (definition and maximum security deposit) (verified 2026) Official source
- S.D. Codified Laws § 43-32-24 (return of the deposit; as amended by Session Laws 2026, ch. 179, § 1) (verified 2026) Official source
- S.D. Codified Laws ch. 43-32 (complete chapter, §§ 43-32-1 to 43-32-37, including the tenant repair escrow at § 43-32-9) · § 43-32-9; § 43-32-24.1 (verified 2026) Official source
How this record was verified: Direct read of the whole of SDCL chapter 43-32 as published by the South Dakota Legislature — every section from 43-32-1 to 43-32-37, with § 43-32-6.1 (definition and maximum), § 43-32-24 (residential return) and § 43-32-24.1 (commercial deposits) read in full. Both occurrences of the word 'interest' in the chapter examined in context, and the chapter searched for escrow, segregation, commingling, trust-account, separate-account and bank terms, whose single hit is the tenant's own repair escrow in § 43-32-9. Currency taken from the codified text itself, which already carries the 2026 session law amending § 43-32-24.