Which statement is true regarding security deposits?

The statement regarding security deposits that is true is that if used, a condition report must be provided to the tenant. This means that when a landlord uses any part of the security deposit to cover damages or unpaid rent, they are required to supply the tenant with a detailed report that outlines the condition of the property at the time of move-out compared to when the tenant moved in. This is a crucial practice, as it helps ensure transparency and allows tenants to understand the reasons behind any deductions made from their deposits.

In many jurisdictions, including Montana, it's also a standard requirement that landlords document and communicate the condition of the rental unit to promote fairness during the transition between tenants. Providing a condition report not only protects the tenant's rights but also protects the landlord from potential disputes over the security deposit.

The other statements may contain elements that could be contextually related to security deposits, but they do not accurately reflect Montana's regulations. For instance, while there may be circumstances under which deposits could be limited or conditions around interest earned discussed, these details vary and might not represent the true legal stance in Montana specifically. Thus, focusing on the requirement for a condition report ensures compliance with the state's expectations for both documentation and tenant protection.