Virginia Landlord’s Guide to Security Deposits
What is a Security Deposit?
If you have ever rented a property, you will be familiar with a security deposit. A security deposit is the amount of money paid to a landlord to protect him or her in case the tenant causes any damages to the rental property or fails to pay rent.
Security Deposit Law -- Where Should I Look?
There are two bundles of laws governing residential leases: common law and the Virginia Residential Landlord and Tenant Act (VRLTA). Common law, in general, applies to landlords who own no more than two residential properties. VRLTA applies to landlords who own more than two residential properties or who have expressly consented to be governed by the VRLTA statute in their lease.
Because VRLTA is mandated for private residential landlords who own more than two properties, the provisions in this statute cannot be avoided using differing provisions in the lease (unless the lease provisions provide more protection for the tenant than the standard VRLTA provisions). However, landlords who own only one or two properties can have lease provisions that differ from VRLTA. For the purposes of this guide, we will be looking at security deposit law under VRLTA. However, it is always important to look first to the lease. As a landlord, it is beneficial to revisit and amend your lease before renting your property. An experienced landlord attorney can help make sure that your lease is drafted in accordance with the law and to best protect your property.
How Much Can I Ask from a Tenant?
In the Commonwealth of Virginia, landlords cannot ask tenants to pay more than the amount of two months’ rent for a security deposit. However, a landlord can choose to ask for less. Commonly, landlords will require a security deposit equal to one month’s rent.
How Can I Use the Security Deposit to Cover My Losses?
Security deposits may be applied to cover a landlord’s losses including
Unpaid rent
Late fees on rent
Damage (beyond what is expected of normal wear and tear)
Any charges or damages specified in the lease (for example, some leases provide that the tenant will cover the cost of carpet cleaning upon move out)
Unpaid utility bills
In general, the security deposit may only be used to cover losses after the tenant has moved out of the property. However, it is possible to make deductions from the security deposit while the tenants remain in the property if the landlord gives the tenant written notice within 30 days of deciding to do so.
How Do I Show What the Security Deposit was Spent On?
First, all landlords should keep accurate and detailed records for security deposits. This means that there should be a record showing when the security deposit was made, how it was stored, and any interest that has accrued. Then, if the landlord needs to make deductions from the security deposit to cover his or her losses, these deductions must be itemized in a clear and detailed record. This record should be made available to the tenant and be kept for two years after the termination of the tenancy. To support the record, it is recommended that landlords take photographs of any damage and mess left by tenants. These photographs may come in handy to support your deductions regarding repairing damage and cleaning. The itemized list of deductions (called a security deposit disposition) must be provided to the tenants within 45 days of the termination of the lease (always check the provisions of your lease.)
In addition to recording any damage, it will also be necessary for landlords to make a reasonable effort to notify the tenant of his or her right to be present during a move-out inspection. If the tenant wishes to be present at the move-out inspection, the landlord should provide adequate notice to ensure that the tenant can attend.
If There are Funds Remaining, How and When Do I Return the Security Deposit to the Tenant?
In order to provide any written notice, itemized deductions, and returned security deposit funds to a former tenant, it is important, but not essential, to get an updated forwarding address from tenants before they vacate the property. Under VRLTA, a landlord is required to return the security deposit (with or without any deductions) within 45 days of the termination of the lease. Unless otherwise agreed to in writing, one security deposit return check can be made out to all tenants and mailed to the forwarding address provided.
What Happens if the Tenant Disputes How I Used the Security Deposit?
The easiest way to avoid litigation over a security deposit is to ensure that you comply will all relevant terms of the lease and the VRLTA (where it applies). While compliance reduces the chance of litigation, a tenant may still choose to dispute the disposition of his or her security deposit. In general, a tenant will pursue litigation in small claims court, where it is less expensive to file. Small claims disputes are limited to a maximum of $5,000 in damages, and attorneys are not included in the process. Instead, each party makes its case, and a judge makes the final decision. If you do have a landlord attorney, your attorney can remove a small claims filing to the General District Court. A tenant may also choose to sue a landlord in the General District Court, which allows the landlord to hire an attorney to defend against the claim on his or her behalf.
What Happens If the Tenant’s Security Deposit Doesn’t Cover the Extent of My Damages?
If the damages, including unpaid rent, end up costing more than the total amount of the security deposit, landlords do have recourse in court. A landlord attorney can help you sue your former tenant for recovery of the cost of the damages. Even if you intend to sue for additional damages and/or unpaid rent, you will still need to comply with your obligations regarding the security deposit. Make sure that you provide your itemized list of deductions, showing how the entire security deposit was spent, within 45 days of the termination of the lease (always check the terms of your lease.)
What Can I Do to Reduce the Chance of a Security Deposit Dispute in the Future?
As mentioned above, compliance is the best way to avoid litigation. However, a clear lease and open communication are also helpful to protect yourself and your investment in your rental property. As soon as you receive notice from a tenant that he or she will be moving out, provide a move out letter to the tenant outlining the move out procedure. This letter can help set expectations with the tenant and clarify each party’s legal rights and obligations. Include in your move out letter:
A confirmation of the move out date
Proposed move out inspection dates and times
Your expectations regarding the unit’s cleaning and condition upon move out
Your final inspection procedure
Procedures for returning keys, providing a forwarding address, and any other final information you wish to communicate
A statement about when and how you will send the security deposit refund and itemized deductions list.
An experienced landlord attorney can help you prepare a move out letter and review your lease to ensure you are protected and compliant with all relevant laws. At Wakefield Law, we have been representing landlords throughout Northern Virginia for 30 years. Feel free to reach out to us to talk about how you can protect your rental property, avoid litigation, and pursue recovery for tenant’s damages. Our phone number is (703) 771-9740.