Landlords in Virginia have a right to ask for a security deposit when they rent out a property. The security deposit ensures compensation for any loss you incur because of a tenant’s actions. Such tenant actions include:
• Early lease termination. Once a tenant signs the lease, they are contractually obligated to stay for the entire term of the lease. There are only two exceptions in this regard. That is, one, if there is an early lease termination clause allowing it. Or two, if they have a legally justified reason to break their lease, such as if they are starting active military duty.
• Nonpayment of rent. After lease signing, tenants are obligated to pay rent for the entire term of the lease, whether or not they live there. So, if they leave without clearing their rent, among the measures you can take is withholding their security deposit.
• Excessive property damage. You can also hold your tenant liable for any damage exceeding normal wear and tear. Examples of such damages include holes in walls, a missing curtain, or a broken tile. If the damage is extreme, you may also want to consider an eviction.
• Unpaid utility bills. Naturally, some utility bills will be in your tenant’s name during the tenancy. And before moving out, it’ll be their responsibility to clear them. So, if they move out without clearing them, you’ll have a right to make appropriate deductions from their deposit.
With that in mind, Virginia has rules on how landlords must handle their tenants’ security deposits. Failure to do so can mean incurring potentially hefty financial losses.
Whether you’re a new landlord or looking to refresh your knowledge of the Virginia security deposit laws, this is a great place to start! The following is a basic overview of the security deposit laws under Virginia's landlord-tenant law.
1. Security Deposit Limit
Virginia has a law on how much landlords can charge their tenants as security deposit. The most you can ask your tenant as a security deposit in the state of Virginia is the equivalent of two months’ rent.
So, suppose you charge tenants a monthly rent of $1,500. This means that the most you can ask them as security deposit is $3,000.
2. Interest on Security Deposit
Before 2014, Virginia required landlords to store their tenant’s security deposit in an interest earning account. The annual interest accrued was calculated below the Federal Reserve’s discount rate. You’d only have to pay this interest to tenants who have rented your property for at least 13 months.
However, now that this requirement was removed by a law, this is no longer the case. As a landlord, you can store your tenant’s deposit in however way you wish if it’s available to them when they move out.
3. Allowable Deductions to Security Deposits
Virginia landlords have a right to make appropriate deductions from a tenant’s deposit for certain reasons. As already explained above, such reasons include:
• Failure by a tenant to pay rent
• Failure by a tenant to clear their utility bills when moving out
• Careless or negligent property damage to the unit
• Other charges that have been spelt out on the lease or rental agreement
Normally, landlords make deductions to a tenant’s deposit once they have moved out of the unit. However, should you require to do so during the tenancy, you must notify your tenant in writing within 30 days of making that determination.
4. Security Deposit Records
In Virginia, landlords have a responsibility of keeping their tenant’s security deposit records. In the records, you must itemize any deductions you’ve made on tenants’ deposits over the last 2 years.
You must provide them to any concerned party when requested during normal business hours. Concerned parties can be the tenant, their attorney, or their authorized agent.
5. Walk Through Inspections
In Virginia, tenants have a right to a walk-through inspection. And as such, you must make reasonable effort to notify your tenant of this right within 5 days of receiving their move-out notice.
If the tenant wants to be present during the inspection, they must respond in writing. Next, you must let them know of the date and time of the inspection, which you must schedule no more than 3 days prior to the tenant moving out.
If there are any damages found, you must provide your tenant with an itemized list.
6. Returning your Tenant’s Security Deposit
In Virginia, landlords have exactly 45 days after their tenant moves out to return their deposit (or whatever remains of it). If there are deductions, you must send the remaining portion alongside an itemized list of deductions.
The delivery must be done via personal delivery or certified mail.
If the damage exceeds the security deposit amount, then the damages will need to be fixed by a contractor. You must notify your tenant of this fact within 45 days. You’d then have an additional fifteen days to provide the tenant with an itemized written list of damages.
7. Sale of Rental Property
Selling your rental property will have an impact on your tenant’s security deposit. If you sell it, you’ll need to return your tenant’s deposit back to the tenant. It’ll be the buyer’s responsibility to ensure the details are captured in the buying contract.
8. Non-Compliance to the Security Deposit Rules
There are a bevy of financial repercussions for Virginia landlords who refuse to follow the state’s security deposit rules. Including, forfeiting any right to withhold any portion of the deposit, as well as being liable to damages and reasonable attorney fees.
New landlords and experienced landlords alike need to be familiar with the local security deposit laws. However, learning and navigating the law by yourself can be difficult. DRP Management is a full-service property management company that serves property owners in Leesburg and its environs. Get in touch with our team to learn more about our services!
Disclaimer: This content is only meant to be informational and not a substitute for professional legal advice. Also, laws change, and this information may no longer be up to date at the time of your reading. For expert help, please get in touch with either a qualified attorney or an experienced property management company.