Virginia Security Deposit Law: Essentials for Property Managers in 2024

Virginia Security Deposit Law: Essentials for Property Managers in 2024

Author: Kasee Godwin
Date: 12.14.2023

As a property manager in Virginia, staying well-informed about the latest security deposit laws isn’t just good practice—it’s a cornerstone of your business’s credibility and legal compliance.

This guide breaks down Virginia’s security deposit laws, including how much you can charge, what you can deduct, and the timeline for returning deposits. We’ll also cover what you need to know about security deposit alternatives—and if they’re required for Virginia properties.

Virginia Security Deposit Laws: Key Points

There are a few key points that property managers in Virginia should know regarding legal compliance related to security deposits they receive from residents:

  • Virginia property managers can charge a maximum security deposit that is equivalent to two months’ rent.
  • Landlords may request additional deposits for pets, except for service animals.
  • Property managers are required to return a resident’s security deposit (or provide an itemized list of deductions) within 45 days after the resident’s move-out date.

Read on to take a closer look at Virginia’s security deposit laws.

Recent Changes to Virginia Security Deposit Laws

Several changes were made to the Virginia Residential Landlord Tenant Act in July 2023. Property managers should be aware of these updates as they rent properties to residents in 2024:

1. Notice of Rent Increase

Virginia code (HB1702) requires property managers to provide a minimum of 60 days’ notice to residents of any rent increase that would take effect in a new lease term. This rule only applies to landlords who own four or more properties.

2. Early Lease Cancellation

Virginia HB1635 gives renters a specific procedure they can follow within the first seven days of a lease to demand the termination of their lease. This process will also help them demand a refund for their security deposit and rent. Examples of situations for which a resident can seek early lease termination include perceived fire hazards or threats to life, health, or safety, such as:

  • Lack of heat
  • Lack of hot or cold running water
  • Lack of electricity
  • Inadequate sewage disposal facilities
  • Infestation of rodents

Property managers then have a 15-day window to contest the notice received from the resident.

3. Notification of Security Deposit Reductions

Virginia HB1542 gives property managers 30 days to provide an itemized list of deductions from a security deposit during the lease term, up from 15 days.

4. Mandatory “Tenant’s Rights and Responsibilities” Form

Virginia HB1735 states that property managers must supply their renters with a “tenant’s rights and responsibilities” form at the beginning of each lease period. This is published by the Virginia Department of Housing and Community Development. If the resident refuses to sign the form, the property manager should document the date the form was provided.

Security Deposit Alternative Laws in Virginia

As of 2024, Virginia law doesn’t require property managers to offer residents security deposit alternatives (SDAs). However, a growing number of states have passed legislation related to SDAs, so property managers need to understand what a security deposit alternative is, and what the benefits to residents are. 

A security deposit alternative is an alternative to the traditional cash deposit required by property managers. Rather than asking residents to pay a sizeable upfront sum, alternatives such as surety bonds or installment-based deposit programs allow residents to pay smaller, recurring payments.

For example, Qira is a financial management platform for property managers that offers a security deposit program. This program allows residents to pay a monthly fee as low as $5 instead of a lump-sum cash deposit, reducing move-in costs. Qira also makes the security deposit collection process easier for property managers.

Platforms like Qira offer major benefits to both residents and property managers. Residents get to keep more cash in their pockets, and property managers don’t have to assume any additional risk—Qira handles it for them.

To learn more, check out Qira’s security deposit program here.

Collecting Security Deposits in Virginia

Grasping the intricacies of security deposit collection is not just helpful—it’s crucial. Maneuvering the legal aspects of property management can be tricky, but with a clear strategy, you can secure your properties effectively and comply with state laws.

Maximum Security Deposits

Landlord-tenant laws in Virginia cap the amount that property managers can charge for a security deposit at the equivalent of two months’ rent.

Property managers can require residents to get renter’s insurance and require the premiums to be paid before the move-in date. However, the combined amount of the insurance premiums and the security deposit cannot exceed the equivalent of two months’ rent.

Property managers in the state of Virginia are not required to provide a written receipt of the tenant’s security deposit.

Pet Deposit Laws

Property managers in Virginia may charge an additional pet deposit fee. However, they are prohibited from charging for service animals used by renters with disabilities, according to the Fair Housing Act.

Storing Security Deposits 

There are no specific landlord-tenant laws in Virginia that dictate where, or how, a property manager has to store a resident’s security deposit.

Paying Interest on Security Deposits

Property owners in Virginia are obligated to pay the residents interest on their security deposits. However, this law only applies if the resident lives in the rental unit for 13 months or more. 

Tax Implications of Security Deposits

In the state of Virginia, a security deposit is not considered taxable income when it is first received—because it is not immediately considered revenue. This is because the property manager could still need to reimburse the security deposit to the resident. 

Here are some guidelines to help property owners determine if a security deposit should be reported as taxable income:

  1. If the property manager and resident both agree to use the security deposit as the last month’s rent, it should be reported as income when received.

  2. If the security deposit was used to cover the cost of repairs and other expenses, the property manager should report it as income.

  3. If the property manager holds onto a security deposit due to the resident’s failure to pay rent (or a breach of the rental agreement), the amount kept should be reported as income in the year it was forfeited.

Allowable Deposit Deductibles in Virginia

Property managers in Virginia may use an amount of the deposit (or all of it) if the property suffered damage that was the direct result of abuse or negligence by the resident.

If a property manager makes deductions from a security deposit during a resident’s tenancy, they have to send a written notice to the resident within 30 days of the deduction. The written notice must show an itemized statement of deductions made.

Some reasons why property managers may deduct from a resident’s security deposit include:

  • Unpaid rent
  • Unpaid utility bills
  • Abandonment of the premises (i.e. the resident moves out of the property before the lease agreement is complete)
  • Damages to the property beyond normal wear and tear

What is Considered Normal Wear and Tear?

Normal wear and tear is the expected damage or natural deterioration of a rental property that occurs due to everyday use over time. For example:

  • Loose door handles
  • Fading paint
  • Faded hardwood floors
  • Small carpet stains
  • Minor scrapes on flooring or walls.

Excessive Property Damage

Any damage that is considered above and beyond normal wear and tear is commonly referred to as excessive property damage. For example: 

  • Broken windows and light fixtures
  • Large nail holes in the wall
  • Carpet stains or holes
  • Broken locks, door frames, or doors
  • Unauthorized painting or remodeling 

Returning Security Deposits in Virginia

Property managers should be aware of security deposit laws and communicate with their residents to make sure the process of returning security deposits goes smoothly for everyone.

Security Deposit Return Timeline

Virginia security deposit law requires property managers to return all or part of a resident’s security deposit within 45 days to a forwarding address provided by the resident. 

If the resident lives in the rental unit for 13 months or more, the landlord is also obligated to pay interest on the security deposit. If the landlord makes any deductions from the security deposit for damages that exceed normal wear and tear, they are required to provide the resident with an itemized list of deductions with the returned deposit.

Penalties for Not Returning Security Deposits on Time

According to Virginia landlord-tenant laws, if a landlord fails to return the security deposit (or what remains after deductions) within 45 days, they are liable to provide the resident with a refund for the full amount of the security deposit, including all damages, court costs, and reasonable attorney’s fees.

Move-Out Inspections

Virginia landlord-tenant law requires property managers to perform a walk-through inspection of the rental unit. The walk-through inspection must be completed within 72 hours of the resident’s move-out date.

In addition, the property manager must provide residents with a written notice of the resident’s right to be present while the unit is being inspected. This notice must be provided within 5 days of the resident giving notice that they wish to move out of the property. 

Using a Security Deposit as Last Month’s Rent

In Virginia, there is no law governing whether property managers can or cannot use a security deposit as the last month’s rent. The decision is up to the property manager and should be clearly outlined in the resident’s rental agreement. 

The Bottom Line on Virginia’s Security Deposit Laws

Virginia property managers must maintain a strong understanding of the state’s security deposit laws. By following these guidelines, property managers can better protect their investments and ensure a fair process for everyone involved.

If you’re a property manager looking to reduce resident move-in costs and simplify the security deposit collection process, Qira can help. Qira’s security deposit program is the only cash-managed system in the industry.

If you’re ready to get started, you can book a demo and learn more about Qira today.

Disclaimer:

Qira aims to keep this information as up-to-date as possible. The content provided here is for informational purposes only and should not replace legal advice. Please refer to the relevant government sources to check for any changes or updates to the law.

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Kasee Godwin

Position: Director of Marketing
Social Networks

Kasee is the Director of Marketing for Qira. She has nearly 15 years of experience in the real estate marketing industry, including 10 years on the client side. In her spare time, she enjoys reading science fiction, exploring new wineries, and fostering Golden Retrievers.

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