Taking a security deposit is a necessary part of beginning a lease agreement between tenant and landlord. 

To protect yourself as a landlord, make sure you have a signed lease agreement and have received all upfront rent and the security deposit before handing over the keys to the rental unit. This means waiting for any checks to clear.

Quick facts about Washington, DC security deposit law

Maximum Deposit Amount

1 month's rent

Deadline to Return Deposit

30 days after tenant vacates the property

Non-Return of Deposit

If the deposit is not returned within 30 days, tenants may be entitled to double the deposit amount as a penalty

Late Fees

No more than 5% of the monthly rent or $15, whichever is greater, can be charged for late payment of rent

For more details, you can refer to the full resources at D.C. Tenants’ Rights Center. 

Deposit Limits and Escrow Rules

Washington, D.C. deposit rules

In the District of Columbia a security deposit cannot exceed one month’s rent, and it must be deposited in an interest bearing escrow account in a financial institution in the District of Columbia that is insured by a federal or state agency. 

The landlord must disclose the name and address of the financial institution, and must inform the tenant of the prevailing interest rate for each six-month period over the past year.

Charges and Move-Out Inspections

For Landlords

When it comes time to return the security deposit, the landlord is allowed to charge for breaches of the agreement (which could include physical damages such as damage to the Premises, any of the buildings, common areas, parking areas, furniture, fixtures, carpet, or appliances).

A landlord can also charge for monetary damages incurred due to abandonment of the premises, nonpayment of rent, and late charges. The tenant can not apply the security deposit to the last month’s rent or any other charges.

For Tenants

When it comes time for the tenant to vacate, D.C. Mun. Regs. Tit. 14, § 310 states that in order to determine the amount of the security deposit or other payment to be returned the landlord must first inspect the premises within three days, excluding Saturdays, Sundays, and holidays, before or after the termination of the tenancy. 

The landlord must schedule the inspection at a time and date that is communicated to the tenant in a notice of inspection. The notice of inspection must be delivered to the tenant, or at the premises, at least ten days before the date of the intended inspection.

Returning Rental Deposits and Interest Due

District of Columbia rental deposits

District of Columbia landlord tenant law requires the landlord to return the rental deposit, minus any charges, within 45 days after the rental agreement terminates. The landlord has two options:

  1. Return the full security deposit including any interest.
  2. Notify the tenant in writing of the intention to withhold the security deposit to cover damages or other charges. If there are damages or other charges, the landlord has another 30 days to return the balance of the security deposit, any applicable interest, and an itemized statement of repairs or other charges that were deducted from the security deposit.

A landlord must pay interest on a security deposit in an escrow account for tenancies of 12 months or greater. Interest is paid at termination of the tenancy. The accrual of interest begins on the date the security deposit is paid by the tenant and accrues at the statement savings rate.

At the end of a tenancy, the landlord must list for the tenant the interest rate for each six-month period during the tenancy. So, it’s important to stay organized when it comes to security deposits, keep accurate records, and document everything.

2024 Updates to D.C. Laws

Washington, D.C.'s rental market has undergone significant legal updates in 2024, particularly aimed at enhancing transparency and fairness for both landlords and tenants. These changes impact various aspects of landlord-tenant relationships.

Below are the key updates every stakeholder should be aware of:

  • Interest on Security Deposits: Under the 2024 amendments, landlords must now deposit security funds into interest-bearing accounts at a higher rate than before, aligning with updated benchmarks set by the D.C. Rental Housing Act. The new regulations aim to ensure tenants earn a fair return on their deposits during tenancy. The interest rate is adjusted annually.
  • Security Deposit Returns: Legislation now requires landlords to return security deposits within 30 days after the tenant vacates the unit, a reduction from the previous 45-day window. Along with the deposit, landlords must provide an itemized list of deductions, if any, accompanied by supporting receipts or documentation.
  • Documentation Requirements: The Washington DC security deposit law mandates photo or video evidence of the property's condition during move-in and move-out inspections, which must be signed off by both parties. Failure to comply can result in penalties or loss of claim over security deposit deductions..
  • Limits on Security Deposit Amounts: The maximum allowable security deposit has been capped at one month’s rent.
  • Tenant Education Initiatives: To increase awareness, D.C. now requires landlords to provide tenants with a copy of the updated “District of Columbia tenant bill of rights” at lease signing. This document outlines all rights and responsibilities regarding security deposits, repairs, rent increases, and dispute resolution.

Bottom Line

With significant changes to DC security deposit law and tenant rights in 2024, Washington, D.C. continues to prioritize balance and accountability in the rental market. By understanding these laws, both parties can benefit from a more streamlined and fair rental process.