Virginia landlords and tenants have a responsibility to know the laws that govern security deposit. There are specific security deposit procedures and requirements that a landlord should follow. Landlords are accountable for tenants’ deposits, but tenants should also understand their legal rights when entering a lease agreement.
Quick Facts for Virginia
- Maximum Amount: Cannot exceed 2 months’ rent
- Duration for Return: 45 days after end of lease
- Penalty for Late Returns: Twice the refund deposit amount
- Itemized List Requirements: Must be sent within 10 days of written confirmation
The Purpose of a Security Deposit
Security deposits serve as a safety net for landlords should they suffer financial losses caused by the tenant, who may have damaged the rental property, or breach the lease agreement, or skipped on the rent.
Allowable Security Deposit Charge
Landlords may not charge a tenant a security deposit that is more than two months’ rent (VA Code § 55-248.15:1(A)).
Returning Security Deposit
- Timeframe:A landlord has 45 days to refund a tenant’s security deposit, or if a tenant provides written confirmation of utility payment after the expiration of the 45-day period, the landlord must refund any remaining balance of the security deposit to the tenant within 10 days following the receipt of the written confirmation (VA Code § 55-248.15:1(A)).
- Itemized Accounting: The landlord should provide the tenant with a written notice, itemizing any deductions to be made from his/her security deposit, and the reasons for each deduction; the notification should be made within 30 days of the date the deductions are determined. Notification is not required for deductions that are made less than 30 days before the termination of the rental agreement (VA Code § 55-248.15:1(A)).
- More Than One Tenant: If more than one tenant is bound to a rental agreement, a refund of the security deposit should be made with one check that is payable to all tenants and sent to the forwarding address provided by one of the tenants, unless other arrangements are agreed to in writing by each of the tenants (VA Code § 55-248.15:1(A)).
- Forwarding Address: Regardless of the number of tenants bound to a rental agreement, if a tenant fails to provide a forwarding address to the landlord where the refund of the security deposit should be delivered, one year from the date of the end of the 45-day time period, the remainder of the security deposit will be paid to the Commonwealth and paid into the state treasury, and credited to the Virginia Housing Partnership Revolving Fund. When paid to the Commonwealth, the landlord is no longer liable to the tenant for the security deposit.
Failure to Comply With the Security Deposit Law
If a Virginia landlord willfully fails to comply with the state’s security deposit law, the court will order the return of the security deposit to the tenant, plus actual damages and reasonable attorney fees. However, if the tenant owes the landlord rent, he/she will have to pay an amount equal to the security deposit credited against the rent owed to the landlord.
Damages Exceed the Security Deposit
If damages to the rental premises exceed the amount of the security deposit and require the services of a third party contractor, the landlord must give the tenant a written notice that advises him/her of that fact within the 45-day period. If notice is given, the landlord has an additional 15-day period to provide the tenant with an itemization of the damages and the cost of repair. The landlord or tenant may recover other damages to which he/she may be entitled (VA Code § 55-248.15:1(A)).
Allowable Deductions from a Security Deposit
A Virginia landlord may deduct from the security deposit the following (VA Code § 55-248.15:1(A)):
- The payment of accrued rent, including the reasonable charges for late payment of rent specified in the rental agreement
- Cost of damages which the landlord has suffered because of tenant’s noncompliance with VA Code § 55-248.16, minus reasonable wear and tear
- Cost of other damages or charges as provided in the rental agreement.
- Reasonable cost of the balance due on the water, sewer or other utility charge that is an obligation of the tenant to a third-party provider under the rental agreement
- Administrative fee for expedited processing as established in a rental agreement
Third Party Provider Utility Account Obligation
When payment of the balance due on a water, sewer, or other utility account that is an obligation of the tenant is completed, the landlord must provide written confirmation to the tenant within 10 days after, along with any balance due to the tenant. The tenant may provide the landlord with confirmation of payment the final water, sewer, or other utility bill (VA Code § 55-248.15:1(A)).
Notify Tenant of Rights and Obligations if Withholding Security Deposit
If the landlord wishes to withhold any portion of a tenant’s security deposit deductions he/she must inform the tenant of his/her rights and obligations in, a termination notice to the tenant; a vacating notice to the tenant, or a separate written notice to the tenant at least 15 days before deductions are taken from the security deposit (VA Code § 55-248.15:1(A)).
Landlords are required to maintain and itemize records for each tenant, of all deductions from security deposits, which the landlord has made because of a tenant’s noncompliance with § 55-248.16 during the preceding two years (VA Code § 55-248.15:1(B)(1)). A landlord must allow a tenant or his/her authorized agent or attorney to inspect the tenant’s records of deductions at any time during normal business hours (VA Code § 55-248.15:1(B)(2)).
The landlord must make reasonable efforts to advise the tenant of his/her right to be present at the inspection when the landlord requests that a tenant vacate the premises, or within five days after the landlord receives notice from the tenant of intent to vacate. The tenant must make the landlord make the landlord know that he/she wants to be present for the inspection. The landlord must notify the tenant of the time and date of the inspection, which must be made within 72 hours of delivery of possession by the tenant. When the inspection is completed, the landlord should provide the attending tenant with an itemized list of damages to the rental premises that are present at the time of the inspection (VA Code § 55-248.15:1(C)).
If the tenant has any assignee or sublessee, the landlord can hold a security deposit from only one party in compliance with the security deposit provisions (VA Code § 55-248.15:1(D)).
Applying Security Deposit as Last Month’s Rent
A security deposit is not intended to be used to cover a tenant’s last month’s rent, but the provision can be established between the landlord and tenant in the rental agreement.
How to Get a Full Refund of Security Deposit
A full security deposit can be returned to the tenant if there is no damage to the rental property, rent is paid in full, all charges in the rental agreement are covered.
Security Deposits and Tax Filing
What happens to the deposit at the end of the tenancy determines how it is treated for tax purposes.
Accounting for Security Deposits
Security deposits are treated as either assets or liabilities when filing taxes. Tenants shouldn’t deduct security deposits as expenses and landlords shouldn’t declare them as income when in escrow intended to be returned to the tenant.
Security Deposit Write-off
If a landlord withholds part or all of the security deposit for losses, that amount should be included as income when filing taxes. Forfeited deposits should be declared as income.
“Normal Wear and Tear” vs. Damage
- “Normal wear and tear” is deterioration that occurs as a result of everyday use of the rental unit, and without negligence, carelessness, accident, or misuse or abuse by the tenant.
- “Damage” refers to destruction to the rental unit that occurs because of abuse or negligence by a tenant during the course of the tenancy and can affect usefulness, value, normal function of the rental unit.
New Property Owner Responsible for the Security Deposit
The new owner of the rental premises is responsible for returning a tenant’s security deposit at the termination of the tenancy, whether or not the security deposit is transferred with the landlord’s interest by law or equity, regardless of any contractual agreements between the original landlord and the new landlord (VA Code § 55-248.15:1(A)).
Virginia Law on Security Deposits
If you are interested in learning more about Virginia statutes on security deposits see VA Code § 55-248.15:1.
Tips for Virginia Landlords on the Right Practices for Security Deposits
- Charge a tenant no more than two month’s rent for the security deposit
- Return security deposits within 45 business days of lease termination
- Provide statement of itemized deduction within 30 days of the date the deductions are determined
- Prepare to pay twice the amount of the original security deposit if you do not return the security deposit within the required timeframe
- Withhold security deposits for rent owed and damages
- Seek damages in legal proceedings if you feel entitled based on non-compliance by a tenant
VA Code § 55-248.15:1 is the best source of reference when seeking to learn more about the state’s security deposit law. Landlords and tenants should take an interest in getting to know the state law that governs security deposits.