The law in Washington D.C. that regulates how landlords handle tenants’ security deposits can be somewhat confusing. It’s relatively common for landlords to unknowingly violate the law and suffer unfortunate legal consequences.
If you are planning to charge a tenant a security deposit or you are currently holding a security deposit on a tenant’s behalf, you should review the applicable statutory law to ensure that you are in compliance. Here are some of the most important rules about security deposits that you should be aware of.
There are limits on what you can charge
The amount of security that you request from a residential tenant cannot exceed one month’s rent. Of course, you can request a lesser amount if you choose.
You must hold deposits in escrow
After you accept a security deposit, you must put it into an escrow account within 30 days. You cannot deposit the funds into a personal bank account or a business’ operating account. You may put more than one tenant’s deposit into the escrow account.
You must return deposits within a specific time frame
Landlords have 45 days to return a security deposit after a tenant surrenders occupancy. If you are going to withhold any portion of a deposit, you must provide the tenant with an itemized statement detailing the damage or unpaid rent that you are applying the deposit towards.
Complying with the law about security deposits can spare you from legal problems with a tenant. While compliance can be somewhat onerous, it is preferable to compromising your legal rights as landlord.