http://tenant.net/Other_Areas/Minnesota/faq.html#faq Minnesota landlord-tenant law.
My landlord has kept all of part of my damage deposit, or some other type of deposit: what can I do about it?
First, remember you're not alone. Damage deposit questions are one of the most problematic areas of landlord-tenant law. It appears that some landlords simply consider the damage deposit a "signing bonus" and don't like to give them back. Fortunately, the law is strongly in favor of the tenant in a damage deposit dispute. One exception is if you're thinking about using the damage deposit for your last month's rent: this is forbidden and there are penalties. DO NOT USE YOUR DEPOSIT TO PAY THE LAST MONTH'S RENT.
Minnesota Statue 504.20 deals with damage deposits. The rules that follow apply to any money you might have given your landlord whether it was called a damage deposit, rent deposit, pet deposit, or anything else. The only exception is an explicit advance payment of rent.
Your landlord must provide a list of written reasons for keeping your money within three weeks after you leave, unless you left because the building was condemned in which case they must provide a list within five days. You, in turn, must provide your landlord with an address they can mail the list to. Do this via certified mail (jot a quick note to your landlord with your new address and bring it to the post-office, then keep the green card they send back to you).
If your landlord has sent you a list of reasons see if the landlord claims 1. you didn't pay your rent and so they kept the deposit money to cover it, or 2. you injured the building beyond ordinary wear and tear. If they are claiming they kept money for any other reason, add up the amount and put it aside. After that, add up any amounts that aren't true (for example, the landlord charged for repainting when the apartment hadn't been painted in five years: the repainting is what's called normal wear and tear). Add these amounts to those amounts in the last list and jot them down. Remember, your landlord has the responsibility to prove the "damages" -- you do not have a responsibility to prove they didn't happen. Don't hesitate to remind a judge of that, if necessary.
Add all the amounts on your list and double the total. Then, if your landlord didn't send the list in time or you're reasonably sure they knew they didn't have a right to keep your money, tack on another $200 (that's what "bad faith" means). Give your landlord a call or jot them a nasty note telling them you're going to sue for the total amount you've come to above and that you're "entitled to recover that amount pursuant to Minnesota law." Set a deadline for them returning your deposit and, if they don't, march down the county courthouse and sue them for the total amount -- i.e.: double the amount on your list plus $200, if applicable.
All damage deposit disputes are addressed in conciliation court, not housing court. If you're not sure where conciliation court is, the people at the courthouse will guide you to the right place. Don't forget to add any other amounts you're entitled to in your lawsuit. If you live in Ramsey and Hennepin county and there's also a rent escrow or eviction involved, you should sue in housing court.
