As a property owner, you can understand that renting out a property comes with its own fair share of risks. For example, a tenant may cause negligent property damage to your Virginia rental and have to be evicted or move out without clearing their utility bills.
Virginia does not require property owners to ask for a security deposit from their tenants. However, a security deposit can help cushion you against these financial responsibilities that may arise from a negligent tenant’s actions.
Before collecting a security deposit from your tenant, it is important to know that there are limitations for how a Virginia property owner can apply a security deposit.
The following is everything you need to know about security deposits.
Basics of a Security Deposit
Virginia landlords have a right to make appropriate deductions from their tenants’ security deposits.
The following are common reasons for doing so:
- If the tenant moves out of their rented premises without clearing their utility bills.
- If the tenant causes negligent or careless property damage. The damage must exceed normal wear and tear. Virginia does not define normal wear and tear.
- If the tenant moves out without paying all due rent under the lease. In this case, the security deposit should be declared as income.
Applying a security deposit to your Virginia rental is a great way to make sure both you and your property will be safe from costly damages without having to raise the rent.
How much should landlords charge as security deposit?
Virginia property owners are limited in the amount of the security deposit they can charge their tenants. The highest amount you can charge your tenants shouldn’t exceed two months of rent. So, for example, if you’re charging your tenants $1,500 in monthly rent, then the maximum you collect as security deposit should be no more than $3,000.
Furthermore, a tenant cannot use their security deposit as last month’s rent in Virginia, unless both you and your tenant agree to do so in writing.
If your property has more than one tenant, for example an apartment with roommates, it is up to your tenants to provide a single check for the security deposit. Only one of the tenants can be held responsible for providing the security deposit. This applies in the situation of a sublet as well.
Receipts and Virginia Security Deposit Laws
In Virginia, it is not required to provide a receipt to the tenant after receiving a security deposit. Many landlords will still however, give their tenants a receipt for their records. This will usually include the date and amount received.
It is however the property owner’s responsibility to keep a detailed receipt and itemized list of every deduction made to the security deposit in the last two years. These receipts should notify their tenants of important details such as the amount and date of security deposit they received, the damage to the property, and the cost of repairing this fee.
Furthermore, the property owner must give the tenant a 30-day notice if any deductions are made to their security deposit over the course of the lease.
Your tenant can suggest damage insurance instead of a security deposit payment. If, however, the insurance is cancelled at any point during the lease, the tenant is immediately responsible for paying the full amount of the security deposit.
The insurance provider is required by Virginia law (§ 55.1-1226 s. I) to :
- Coverage the duration of the lease
- Be licensed or approved by the Virginia State Corporation Commission
- Notify the landlord within ten days if the insurance is canceled or lapsed
- Can approve or deny payment of a claim; and
- Provide coverage for each claim equal to the security deposit
Storing a Security Deposit
In Virginia, you are free to store the security in any bank account you desire. You also have no obligation to pay any interest to your tenant for the time the deposit was held.
A security deposit is a great way to avoid personal financial responsibility for your tenant’s negligence. It can be a great way to avoid unnecessary maintenance costs and maintain your return on investment for your Virginia property.
However, the decision to apply and collect a security deposit can be difficult to follow through. This is where the help of Limehouse Property Management can help save you time and stress. Limehouse Property Management is a trusted and flexible property management company that can help your property collecting security deposits. Furthermore, they are qualified to help answer all your questions on all landlord-tenant laws.
Reach out to Limehouse Property Management to learn more today.
Disclaimer: The information contained herein isn’t a substitute for professional legal advice. For expert legal help, kindly consider hiring a qualified attorney or an experienced property management company.