H.F. 2038 Section 1. Section 562A.12, subsection 2, Code 2009, is 1 amended to read as follows: 2 2. All rental deposits shall be held by the landlord 3 for the tenant, who is a party to the agreement, in a bank 4 or savings and loan association or credit union which is 5 insured by an agency of the federal government. Rental 6 deposits shall not be commingled with the personal funds of 7 the landlord. Notwithstanding the provisions of chapter 543B, 8 all rental deposits may be held in a trust account, which 9 may be a common trust account and which may be an interest 10 bearing interest-bearing account. Any interest earned on 11 a rental deposit during the first five three years of a 12 tenancy shall be the property of the landlord. Beginning 13 with the fourth year, rental deposits shall be held in an 14 interest-bearing account and the tenant shall accrue interest 15 on a rental deposit held by a landlord at a rate of five percent 16 per annum, compounded annually. 17 Sec. 2. Section 562A.12, subsection 3, unnumbered paragraph 18 1, Code 2009, is amended to read as follows: 19 A landlord shall, within thirty days from the date of 20 termination of the tenancy and receipt of the tenant’s mailing 21 address or delivery instructions, return the rental deposit and 22 any interest accrued by the tenant under subsection 2 to the 23 tenant or furnish to the tenant a written statement showing 24 the specific reason for withholding of the rental deposit or 25 any portion thereof and return any interest accrued by the 26 tenant under subsection 2 . Interest accrued by a tenant under 27 subsection 2 is not part of the rental deposit for purposes 28 of a landlord withholding an amount for damages under this 29 subsection. If the rental deposit or any portion of the rental 30 deposit is withheld for the restoration of the dwelling unit, 31 the statement shall specify the nature of the damages. The 32 landlord may withhold from the rental deposit only such amounts 33 as are reasonably necessary for the following reasons: 34 Sec. 3. Section 562A.12, subsections 4 through 7, Code 2009, 1 -1- LSB 5203HH (13) 83 md/sc 1/ 5

H.F. 2038 are amended to read as follows: 2 4. A landlord who fails to provide a written statement 3 within thirty days of termination of the tenancy and receipt 4 of the tenant’s mailing address or delivery instructions shall 5 forfeit all rights to withhold any portion of the rental 6 deposit. If no mailing address or instructions are provided 7 to the landlord within one year from the termination of the 8 tenancy the rental deposit and any interest accrued by the 9 tenant under subsection 2 shall revert to the landlord and 10 the tenant will be deemed to have forfeited all rights to the 11 rental deposit and accrued interest . 12 5. a. Upon termination of a landlord’s interest in the 13 dwelling unit, the landlord or an agent of the landlord shall, 14 within a reasonable time thirty days , transfer the rental 15 deposit and any interest accrued by the tenant under subsection 16 2 , or any remainder after any lawful deductions to the 17 landlord’s successor in interest and notify the tenant of the 18 transfer and of the transferee’s name and address or return the 19 deposit and any interest accrued by the tenant under subsection 20 2 , or any remainder after any lawful deductions to the tenant. 21 b. Upon the termination of the landlord’s interest in 22 the dwelling unit and compliance with the provisions of this 23 subsection , the landlord shall be relieved of any further 24 liability with respect to the rental deposit. 25 6. Upon termination of the landlord’s interest in the 26 dwelling unit, and notwithstanding the landlord’s failure to 27 comply with the requirements of subsection 5 , the landlord’s 28 successor in interest shall have all the rights and obligations 29 of the landlord with respect to the rental deposits, except 30 that if the tenant does not object to the stated amount within 31 twenty days after written notice to the tenant of the amount of 32 rental deposit being transferred or assumed, the obligations 33 of the landlord’s successor to return the deposit shall be 34 limited to the amount contained in the notice. The notice 35 shall contain a stamped envelope addressed to the landlord’s 1 -2- LSB 5203HH (13) 83 md/sc 2/ 5

H.F. 2038 successor and may be given by mail or by personal service. 2 7. The bad faith bad-faith retention of a deposit 3 by a landlord, or any portion of the rental deposit, or 4 any interest accrued by the tenant in violation of this 5 section shall subject the landlord to , in addition to actual 6 damages, punitive damages not to exceed two hundred one 7 thousand dollars in addition to actual damages or two times the 8 amount of actual damages, whichever is greater . 9 Sec. 4. Section 562A.21, subsection 4, Code 2009, is amended 10 to read as follows: 11 4. If the rental agreement is terminated, the landlord 12 shall return all prepaid rent , and security , and accrued 13 interest recoverable by the tenant under section 562A.12. 14 Sec. 5. Section 562A.23, Code 2009, is amended by adding the 15 following new subsection: 16 NEW SUBSECTION . 1A. A landlord’s bad-faith failure to 17 supply running water, hot water, or heat, or essential services 18 may, in addition to the damages or costs recoverable under 19 subsection 1, subject the landlord to punitive damages not to 20 exceed one thousand dollars or two times the amount of damages 21 or costs under subsection 1, whichever is greater. 22 Sec. 6. Section 562A.25, subsection 2, Code 2009, is amended 23 to read as follows: 24 2. If the rental agreement is terminated, the landlord 25 shall return all prepaid rent , and security , and accrued 26 interest recoverable under section 562A.12. Accounting for 27 rent in the event of termination or apportionment is to occur 28 as of the date of the casualty. 29 Sec. 7. Section 562A.26, Code 2009, is amended to read as 30 follows: 31 562A.26 Tenant’s remedies for landlord’s unlawful ouster, 32 exclusion, or diminution of service. 33 1. If the landlord unlawfully removes or excludes the tenant 34 from the premises or willfully diminishes services to the 35 tenant by interrupting or causing the interruption of electric, 1 -3- LSB 5203HH (13) 83 md/sc 3/ 5

H.F. 2038 gas, water , or other essential service to the tenant, the 2 tenant may recover possession or terminate the rental agreement 3 and, in either case, recover the actual damages sustained by 4 the tenant and reasonable attorney’s fees. If the rental 5 agreement is terminated, the landlord shall return all prepaid 6 rent , and security , and accrued interest . 7 2. In addition to the actual damages recoverable under 8 subsection 1, if a landlord’s actions are in bad faith, the 9 landlord may be subject to punitive damages not to exceed one 10 thousand dollars or two times the amount of actual damages, 11 whichever is greater. 12 Sec. 8. Section 562A.36, subsection 2, Code 2009, is amended 13 to read as follows: 14 2. If the landlord acts in violation of subsection 1 15 of this section, the tenant may recover from the landlord 16 the actual damages sustained by the tenant and reasonable 17 attorney’s fees, and has a defense in action against the 18 landlord for possession. In addition to actual damages and 19 reasonable attorney’s fees, the landlord may be subject to 20 punitive damages not to exceed one thousand dollars or two 21 times the amount of actual damages, whichever is greater. In 22 an action by or against the tenant, evidence of a good 23 faith good-faith complaint within one year prior to the 24 alleged act of retaliation creates a presumption that the 25 landlord’s conduct was in retaliation. The presumption does 26 not arise if the tenant made the complaint after notice of a 27 proposed rent increase or diminution of services. Evidence 28 by the landlord that legitimate costs and charges of owning, 29 maintaining , or operating a dwelling unit have increased shall 30 be a defense against the presumption of retaliation when a 31 rent increase is commensurate with the increase in costs and 32 charges. “Presumption” means that the trier of fact must find 33 the existence of the fact presumed unless and until evidence is 34 introduced which would support a finding of its nonexistence. 35 Sec. 9. APPLICABILITY. Notwithstanding section 562A.37, 1 -4- LSB 5203HH (13) 83 md/sc 4/ 5

H.F. 2038 this Act applies to rental agreements entered into, extended, 2 or renewed on or after the effective date of the Act. 3 EXPLANATION 4 This bill amends several provisions of Iowa’s landlord 5 and tenant law. Current Code section 562A.12, subsection 2, 6 provides that interest earned on a rental deposit during the 7 first five years of a tenancy is the property of the landlord. 8 The bill reduces that time period from five years to three 9 years. The bill also provides that beginning with the fourth 10 year, a rental deposit must be held in an interest-bearing 11 account, and the tenant accrues interest on the rental deposit 12 at a rate of five percent per annum, compounded annually. 13 The bill provides that interest accrued by a tenant is not 14 considered part of the rental deposit for purposes of a 15 landlord withholding an amount for damages to the property. 16 The bill makes several changes to Code chapter 562A to require 17 landlords to return any accrued interest belonging to the 18 tenant. 19 The bill allows tenants, in certain actions against a 20 landlord, to recover punitive damages in an amount not to 21 exceed $1,000 or two times the amount of actual damages, 22 whichever is greater. Such punitive damages may be recoverable 23 by the tenant in actions relating to a landlord’s bad-faith 24 retention of a deposit or interest accrued by the tenant, a 25 landlord’s bad-faith failure to supply running water, hot 26 water, heat, or essential services, a landlord’s bad-faith 27 ouster, exclusion, or diminution of service, or a landlord’s 28 retaliatory action under Code section 562A.36. 29 The bill applies to rental agreements entered into, 30 extended, or renewed on or after the effective date of the 31 bill. 32 -5- LSB 5203HH (13) 83 md/sc 5/ 5