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Do’s and Don'ts of Virginia Security Deposits – Professional Property Management

System - Thursday, May 5, 2016

If you’re a landlord wondering what you can or can’t do with the tenant’s security deposit, we have a few tips that can help you protect your property as well as the rights of your tenant.

Do collect a security deposit. Even if you’re renting to your brother, your aunt or your best friend, collect a security deposit any time you rent a property out. Even if you’re renting out a garage, you want to have a security deposit available in case there are damages.

Do not collect or demand a security deposit that exceeds two times the monthly rent you will charge. The Virginia Landlord Tenant Act says you can only charge up to two times the monthly rent. So if you’re charging $1,000 a month in rent, you cannot charge more than $2,000 as a security deposit. If you do so, you are violating the law.

Do not allow your tenants to apply the security deposit to the final month’s rent. You want to be able to do a proper move out inspection with the tenants and still have that security deposit in case there are any additional damages. If they leave town in their last month and you go in to find a thousand dollars’ worth of damages left behind by the tenant, you want to have those funds available.

Do send a reconciliation within 45 days of the lease termination. Once your tenant is out, you have 45 days to send any part of the security deposit proceeds and a breakdown of any damages you have charged them for. If you go beyond those 45 days, they can take you to court and get their full security deposit back.

Do hold your itemized reconciliation for two years. The tenants can come back to challenge it up to two years later, so keep it.

Do not ever spend your security deposit as if it is your own money. Keep it in a separate escrow account or leave it with a property manager. You never want to touch those funds because if you get taken to court or called up on to return the funds to the tenant, they need to be whole and accessible.

If you have any questions about security deposits and how to handle them, please contact us at Dodson Property Management.