Washington Security Deposit Collections & Holdings

Washington Security Deposit Collections & Holdings

Last Updated: December 23, 2022 by Ashley Porter

Quick Facts Answer
Maximum / Limit No Limit
Receipt Requirement Yes
Inventory Requirement Required
Interest Requirement None

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

Maximum Security Deposit Allowed in Washington

Washington law does not limit the maximum security deposit, but local jurisdictions can establish their own limits. For example, Seattle limits the maximum security deposit plus any non-refundable fees to one month’s rent and the non-refundable fees cannot exceed 10% of one month’s rent.

note

Spokane and Tacoma laws do not limit the maximum security deposit. Check your local laws to determine if there are security deposit laws specific to your area.

Washington landlords can collect non-refundable fees in addition to the security deposit as long as they are mentioned in the lease agreement, like a non-refundable pet fee.

Landlords can choose to collect a fee instead of a security deposit, which may be partially or fully non-refundable, if all of the following conditions have been met.

  • The tenant agrees to pay the fee instead of the security deposit
  • The landlord provides a disclosure to the tenant regarding their option to select the fee
  • The landlord provides the same options to all tenants
  • The fee is used to purchase insurance to cover damage to the unit and the coverage is not altered during the lease term
  • The landlord provides the terms of the insurance coverage to the tenant in writing

Landlords can charge a deposit up to 25% of the first month’s rent to secure a rental unit in advance. If the tenant moves in, the deposit must be credited to their rent or security deposit. If the tenant does not move in, the landlord can keep the deposit if the tenant was provided with a written statement of conditions when paying the deposit.

Single-family housing is exempt from the security deposit rules in these two situations if an attorney reviews and approves the lease agreement and the lease agreement mentions the exemption.

  • The lease term is longer than a year
  • The lease agreement includes an option for the tenant to purchase

Can Landlords Charge an Additional Pet Deposit in Washington?

Washington law does not prohibit landlords from charging a pet deposit, non-refundable pet fee, and/or monthly pet premium, but local jurisdictions may establish their own rules regarding pet deposits.

In Seattle, landlords can only charge a maximum pet deposit, except for animals that provide support to disabled persons, of up to 25% of one month’s rent in addition to the security deposit and may not charge any other pet-related fees. If a landlord charges a pet deposit in Seattle, the tenant must be permitted to pay it in three equal installments.

How Much Rent Can a Landlord Collect Upfront in Washington?

Washington law does not limit the maximum security deposit, prepaid rent, and non-refundable fees that can be collected upfront, but in some situations, the tenant must be permitted to pay in installments.

Landlords must allow tenants to pay in installments unless the deposit plus non-refundable fees are less than 25% of the first month’s rent and last month’s rent is not collected upfront. The required installment options are:

  • Leases three months or longer – Three consecutive, equal payments
  • Shorter leases – Two consecutive, equal payments

Local jurisdictions may establish their own similar rules.

For example, Seattle Municipal Code allows tenants to pay their security deposit, non-refundable fees and last month’s rent in:

  • Six installments – Leases longer than six months
  • Four installments – Leases shorter than six months
  • Two installments – Month-to-month leases

Security Deposit Collections in Washington

When collecting a security deposit, landlords in Washington must provide the tenant with a written statement describing the condition of the rental unit, where the deposit will be held, and a written lease agreement must be provided that includes the conditions of the deposit.

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

Yes, landlords in Washington must provide a receipt for the security deposit.

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

To collect a security deposit, landlords in Washington must provide a written statement describing the condition of the rental unit at the start of the lease term. The statement must be signed by the landlord and tenant and a copy must be provided to the tenant. The tenant can request one additional copy.

If a landlord fails to provide a written statement when collecting a security deposit, the tenant has the right to sue the landlord for the amount of the deposit including court costs and reasonable attorneys’ fees.

Security Deposit Holdings in Washington

Landlords in Washington must hold security deposits in one of the following:

  • Trust account
  • State or national bank and trust company
  • State or federal savings bank, savings and loan association, or credit union
  • Licensed escrow agent located in Washington

The account must only be used for security deposits and not mixed with the landlord’s own funds. Landlords must provide written notice of the name and address of the financial institution.

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

Washington law does not require landlords to provide interest on held security deposits. If the security deposit is placed in an account that gains interest, it belongs to the landlord unless stated otherwise in the lease agreement.

How Are Security Deposits Accounted for in Washington?

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

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

When a property is sold in Washington, the seller must transfer the security deposit to an equivalent account and notify the tenant of the name and address of the new account.

Sources

Security Deposit Collections in Other States