Washington D.C. Security Deposit Collections & Holdings

Last Updated: April 6, 2023 by Ashley Porter

Quick Facts Answer
Maximum / Limit 1 Month’s Rent
Receipt Requirement Yes
Inventory Requirement None
Interest Requirement Yes (After 1 Year)

To learn about laws on security deposit returns in Washington D.C., click here.

Maximum Security Deposit Allowed in Washington D.C.

Washington D.C. law limits the maximum security deposit to one month’s rent.

Can Landlords Charge an Additional Pet Deposit in Washington D.C.?

In Washington D.C., landlords can charge a pet deposit, except for service dogs and emotional support animals. However, the total security deposit cannot exceed one month’s rent. Landlords cannot exceed the limit by giving them another name like “pet deposit” or “damage deposit.”

This law does not prevent landlords from adding a monthly pet premium.

How Much Rent Can a Landlord Collect Upfront in Washington D.C.?

Washington D.C. law does not address the amount of rent that can be collected upfront.

Security Deposit Collections in Washington D.C.

When collecting a security deposit in Washington D.C., landlords must:

  • Include the terms and conditions of the deposit in the lease agreement or receipt
  • Place the security deposit in an interest-bearing escrow account
  • Provide a receipt for payment, except when made by check
  • Post and maintain a statement regarding interest rates
  • Provide written notice of any pending requests to change the rent ceiling
  • Provide the tenant with a written disclosure

When any tenant submits an application to lease a rental unit, landlords must provide a written disclosure that states the amount of the security deposit. Instructions and the required attachments are provided by the Department of Housing and Community Development.

Before accepting a security deposit, landlords must provide written notice of any pending applications for adjustments to the rent ceiling. The notice must include:

  • The current rent ceiling
  • The new rent ceiling requested in the petition
  • The petition number and filing date
  • Any repairs or renovations planned as part of the petition

Do Landlords Have to Provide a Receipt for the Security Deposit in Washington D.C.?

Landlords in Washington D.C. must provide a receipt for the security deposit, except for payments made by personal check.

The receipt must include:

  • The amount and purpose of the payment
  • The date the payment was received

What Obligations Do Landlords Have to Establish the Condition at Move-in in Washington D.C.?

Washington D.C. law does not have specific obligations before a tenancy related to the condition of the rental unit. While other states like Nevada have pre-tenancy obligations like a written inventory of damages, Washington D.C. does not.

Landlords are always required to ensure their property is habitable and compliant with state and local housing codes.

Security Deposit Holdings in Washington D.C.

Landlords are required to hold security deposits in an interest-bearing escrow account in a financial institution within Washington D.C. insured by a federal or state agency. The security deposits cannot be commingled with the landlord’s own funds.

Are Tenants Entitled to Interest on Their Security Deposit in Washington D.C.?

Tenants are entitled to earn interest on their security deposit if their tenancy is longer than 12 months. The statement savings rate earned by the institution on January 1st and July 1st should be used for the following 6 months. Interest accrues from the first day of the lease term.

If a landlord holds a security deposit in an account that gains interest above the statement savings rate, they can keep up to 30% of the excess interest as an administration fee.

The landlord must post a notice in the lobby and rental office (or similar location) at the end of each calendar year that states where the security deposits are held and the prevailing interest rate for each 6-month period. Each time a tenant moves out, the landlord must add the interest rate that applied to each 6-month period of their lease term.

How Are Security Deposits Accounted for in Washington D.C.?

Security deposits are not considered taxable income when they are collected.

What Happens to a Security Deposit When the Property is Sold in Washington D.C.?

When a property is sold in Washington D.C., the seller must transfer the security deposit to the new owner, who must handle it according to the same rules.

note

Before an apartment is sold in Washington D.C., the seller must first give the tenant the option to purchase their rental unit. (See Conversion and Sales)

Sources

Security Deposit Collections in Other States