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 rental unit and have to be evicted or move out with unpaid utility bills.
Virginia law does not require property owners to ask for a security deposit from each tenant. However, collecting one can help cushion you against these financial responsibilities that may arise from a negligent tenant’s actions.
Security deposit laws are part of the Virginia landlord-tenant law.
Before collecting a deposit from your tenant, it is important to know that there are limitations for how a 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 deposit.
The following are common reasons for applying deductions:
- 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. The state does not define normal wear and tear.
- If the tenant moves out without paying all due rent under the rental agreement. In this case of unpaid rent, the security deposit should be declared as income.
Applying a deposit to your rental is a great way to make sure both you and your rental property will be safe from costly damages without having to raise the rent.
How much should landlords charge as security deposit?
Under Virginia law, property owners are limited in the amount of the security deposit they can charge their renters. The highest amount you can charge your renters shouldn’t exceed two months of rent. So, for example, if you’re charging your renters $1,500 in monthly rent, then the maximum deposit you collect should be no more than $3,000.
Furthermore, a tenant cannot use their deposit as last month’s rent in Virginia, unless both you and your tenant agree to do so in writing.
If the dwelling unit 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 renters can be held responsible for providing the security deposit. This applies in the situation of a sublet as well.
Receipts and Virginia’s Security Deposit Law
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 deductions made to the security deposit in the last two years. These receipts should notify the tenant of important details such as the amount and date of deposit they received, the damage to the dwelling unit, and the cost of repairing this fee.
Furthermore, the property owner must give the tenant a 30-day written notice if any deductions are made to their tenant’s security deposit over the course of the rental agreement.
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 deposits.
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 Virginia 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 deposit
Storing a Security Deposit
You are free to store it in any bank account you desire. You also have no obligation to pay any interest to your tenant.
Returning a Security Deposit
If a landlord fails to return all or part of the deposit, the landlord may have to pay reasonable attorney fees.
A Virginia 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 property.
However, the decision to apply and collect security deposits 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 the Virginia landlord-tenant law.
Reach out to Limehouse Property Management or an attorney to learn more today.
Disclaimer: The information contained herein isn’t a substitute for professional legal advice. For expert legal help on any Virginia landlord-tenant law, kindly consider hiring a qualified attorney or an experienced property management company.