Arkansas Landlord-Friendly, But Deposit Rules Carry Bite

Arkansas has a well-earned reputation as one of the most landlord-friendly states in the country, but that doesn’t mean property owners can ignore security deposit rules. Jerry Larkowski, Managing Broker at ESQ. Realty Group, LLC in Little Rock, is both a licensed attorney and a rental property owner. He acknowledges the state’s landlord-friendly statutes—no rent control, favorable timelines for evictions, and a criminal “failure to vacate” law for nonpayment—but warns that deposits are a common pitfall. Arkansas caps deposits at two months’ rent, and the law’s requirements generally apply to out-of-state investors who use a property manager, even if they own only one or two units. Larkowski advises keeping deposits in a separate account from operating cash to ensure funds are available for refunds. Within 60 days after a tenancy ends, landlords must return the deposit or provide an itemized written notice of deductions for unpaid rent or tenant-caused damage. Using the deposit as last month’s rent is only acceptable if both parties agree. If a tenant successfully proves wrongful withholding, they can recover twice the amount plus attorney’s fees. While landlords can sue for damages beyond the deposit, Larkowski notes it’s often impractical. For investors evaluating rental property in Central Arkansas, current listings are a starting point, and a clear deposit process should be part of the plan before the first lease is signed. In a state that gives landlords wide latitude, the deposit is one of the few places where the law demands a receipt.