Vermont landlords benefit from understanding Vermont security deposit law because it helps them avoid disagreements, reduce unnecessary expenses, and keep turnover efficient.
In this article, you’ll learn everything you need to know regarding these regulations, including maximum amounts property owners can collect, how to store deposits, whether interest is required, lawful deductions, return rules, dispute procedures, and more.
Statutes Regulating Vermont Security Deposits
Vermont locates its security deposit rules in Chapter 137 of Title 9 of the Vermont Statutes Annotated, which guide residential rental practices. These statutes explain how landlords collect, hold, and return deposits, detail required documentation, and clarify when property owners may make lawful deductions at the end of a tenancy.
Maximum Security Deposit Amounts Under Vermont Law
Vermont law does not cap the amount a landlord may require for a security deposit. According to state statute, property owners may set any reasonable amount, regardless of lease type, rental length, or whether a unit comes furnished.
Security Deposit Storage Regulations
Vermont law does not set rules for how landlords must store security deposits or what type of account they must use. Property owners may hold deposits in any format they consider secure, as long as they protect the funds and follow all requirements for documentation, lawful deductions, and timely return.
Security Deposit Interest in Vermont
Vermont does not require landlords to place security deposits in interest-bearing accounts or to pay tenants interest on those funds. Property owners may choose how they hold deposits, as long as they comply with all rules regarding documentation, deductions, and timely return.
Making Security Deposit Deductions
Security deposit deductions help landlords protect the long-term condition of a rental property. Tenants sometimes leave damage that goes beyond ordinary use, and landlords depend on deposit funds to cover repairs that return the unit to its earlier condition and keep the property in reliable working order.
When Landlords Can Deduct
Vermont landlords may draw from a tenant’s security deposit for the following reasons:
- Repairing damage beyond normal wear and tear that harms the unit’s condition
- Replacing fixtures or appliances that have broken due to improper tenant use
- Restoring unauthorized alterations that require professional correction
- Covering cleaning costs needed to return the unit to its previous state
- Paying unpaid rent or charges allowed under the rental agreement
When Landlords Can’t Deduct
Vermont landlords may not draw from a tenant’s security deposit for the following reasons:
- Routine cleaning tasks are linked to standard turnover between occupants
- Minor cosmetic issues that occur with ordinary residential use
- Costs created when landlords fail to maintain building systems
- Improvements that improve the unit beyond its prior condition
- Normal aging of paint, flooring, finishes, or installed appliances
Necessary Documentation to Accompany Deductions
Vermont law requires landlords to return a security deposit to a tenant with a written, itemized statement that lists every deduction. Landlords must send this statement to the tenant’s last known address within 14 days after move-out. Landlords do not need to include receipts or invoices, although many tenants request them for clarity.
What to Do When Deductions are Greater Than the Deposit
Some tenants leave damage or unpaid charges that exceed the security deposit. When this happens, landlords should send a written demand for the remaining balance and include an explanation of the charges. If the tenant refuses to pay, landlords may file a claim in their local small claims court or send the matter to a collections agency to pursue the outstanding amount.
Returning Security Deposits to Tenants
Vermont law requires landlords to return any remaining portion of a tenant’s security deposit after lawful deductions, along with a written, itemized statement that explains each deduction.
Required Timeline for Return
Vermont landlords must return the deposit and itemized statement within 14 days after they learn the tenant vacated or receive notice of move-out. According to state statute, seasonal or nonprimary residence rentals allow landlords up to 60 days to complete the return and provide the statement.
Method for Return
Landlords must hand-deliver or mail the deposit and deduction statement to the tenant’s last known address as required by Vermont law. The law does not set a specific payment method, so any reasonable approach that ensures the funds reach the tenant works.
Penalties for Late Return
If landlords miss the deadline for returning a tenant’s security deposit and statement, they lose the right to withhold any portion of the funds. If a court finds the delay was in bad faith, landlords may owe double the amount wrongfully kept, along with reasonable attorney fees and court costs.
Security Deposit Disputes
Tenants who disagree with how a landlord handles their security deposit have full authority to raise a dispute. They often begin by challenging specific deductions or asking the landlord for clarification. If the issue continues, tenants may seek mediation or file a claim through the Vermont small claims court.
As a landlord, prepare for potential disputes by using move-in and move-out checklist forms, maintaining organized accounting and bookkeeping, and outlining clear expectations in the lease agreement. Thorough documentation, a strong understanding of Vermont rental laws, and strict attention to required timelines also help support fair outcomes.
Using Condition Reports to Document Damage
Vermont landlords who use detailed move-in and move-out condition reports to document a unit’s condition at every turnover are better positioned to justify lawful security deposit deductions for damage beyond normal wear and tear.
To do so, use property management software to generate digital reports with photos and videos directly from a smartphone. By documenting the unit before move-in and after move-out, you’ll make security deposit deductions far less negotiable.
Sign up for a free TurboTenant account to collect security deposits, streamline documentation, and store every important document securely.
FAQs: Vermont Security Deposit Law
Can a landlord deduct painting from a security deposit in Vermont?
A landlord may deduct painting costs only when a tenant leaves damage that goes beyond normal wear and tear. Routine repainting that naturally comes with age or regular use does not qualify, and landlords should document any conditions that justify a deduction.
Are nail holes considered normal wear and tear in Vermont?
Small nail holes from lightweight decorations usually count as normal wear and tear in Vermont. Larger holes, wall anchors, or excessive markings may qualify as damage and allow a landlord to deduct repair costs when properly documented.
Does the landlord or tenant have to pay for carpet cleaning in Vermont?
A landlord may charge for carpet cleaning when a tenant leaves stains, heavy soil, or other issues beyond ordinary wear and tear. Basic cleaning tied to a standard turnover remains the landlord’s responsibility and does not justify withholding a portion of the deposit.
What happens if a landlord doesn’t return a security deposit within 14 days in Vermont?
A landlord who fails to return the deposit and itemized statement within 14 days forfeits the right to withhold any funds. If a court finds the delay was willful, the landlord may owe double the amount wrongfully kept, along with reasonable attorney fees and court costs.
