What Landlords Should Know About Virginia Security Deposit Laws

Published May 2021. Updated July 6, 2023. 

In Virginia, landlords require security deposits as part of the move-in costs. The deposit acts like a safety net for landlords against financial ruin a tenant may cause during their tenancy. 

The Virginia security deposit law is contained in the statewide landlord-tenant law and is one of the many legal obligations property owners must follow when operating rental properties.

Are you up to speed on the regulations for these deposits? Our experts put together the following answers to many common questions we hear about the state's security deposit law. We'll also talk about a deposit-free alternative owners can consider to help improve vacancy rates!

An Overview of Virginia Security Deposit Law

Are your questions here? Read through each one and check our expert insights about security deposits. We also recommend consulting your attorney for legal advice regarding deposits and your Hampton Roads area rental properties.

Is there a limit to how much a landlord can charge for the security deposit? 

Yes! An experienced property manager can tell you there is a limit to how much you can charge your Virginia tenants when setting the deposit amount.

The maximum you can charge is 2x the monthly rent. For example, if you charge your tenants a monthly rent of $1,500, then the most you can charge them as a security deposit is $3,000.

How should a landlord store a tenant's security deposit? 

In the past, Virginia required landlords to store a tenant's security deposit in an interest-bearing account. The annually earned interest would then be payable to tenants who had rented the property for more than 13 months. 

Today, however, this is no longer the case. Landlords are free to choose where to store a tenant's security deposit. However, we recommend consulting your attorney or accountant and a property manager to make sure deposits are stored and processed legally.

When can landlords make a deduction to the security deposit? 

Virginia landlords can deduct all or a portion of the tenant's security deposit for various legal reasons. 

Perhaps the most common reason is the nonpayment of rent. When a tenant signs a lease, they must continue paying all rent due under the lease, regardless of whether they live in the property or not. So, if a tenant terminates their lease early, you can deduct all or a portion of their deposit.

Another reason you may be able to make a deduction is to cover the costs of repairs for excessive property damage. Most leases require tenants to return a rental unit in the same condition they found it at move-in, with the exception of normal wear and tear.

If a tenant causes excessive property damage, you can deduct a portion of their security deposit. 

As a landlord, you may also deduct a tenant's security deposit to pay unpaid utility bills. When tenants sign a lease, they become responsible for paying for some utilities. If they move out without clearing them, you may deduct the appropriate amounts from their deposit. 

However, you can't charge your Virginia tenants or deduct from the deposit for cleaning costs or routine fixes for normal wear and tear for a rental unit.

Do landlords have to provide a security deposit receipt? 

No, this isn't required in the state of Virginia.

Nonetheless, most landlords still notify their tenants upon receipt of their deposit. In the notice, they also state the amount received and where they are storing it. 

Are walk-through inspections necessary in the state of Virginia? 

Yes. Both landlords and tenants can perform walk-through inspections.

However, it's important to respect your tenant's privacy throughout the end of the lease — even after they've notified you that they plan to move out. Landlords must make reasonable efforts to inform their tenants of the inspections five days after receiving the move-out notice.

In the notice, you must state the date and time of the inspection. The tenant must also respond in writing if they wish to be present during the inspection. 

Do Virginia landlords have to maintain records of tenants' security deposits? 

Yes. This is mandatory for landlords in Virginia.

Landlords must keep all security deposit records, including any itemized deductions made within the previous two years. You must also make the deposits available for viewing to the tenant and any of their representatives. 

When should landlords return all or a portion of the security deposit? 

In the state of Virginia, you must return a tenant's security deposit within 45 days once a tenant moves out. If you've made any deductions to the deposit, you must also include an itemized statement of the deductions alongside the remaining portion of the deposit. 

Delivery of the notice may be made via certified mail or through hand delivery.

If the tenant left no forwarding address, you must only keep the deposit for a year. After that, it becomes unclaimed property, and you must take it to the State Treasury. 

A property manager can help you understand when and how to return the security deposit to follow landlord-tenant laws!

What happens if a landlord fails to return the deposit to the tenant? 

Failure to return all or a portion of the tenant's deposit within the stipulated time may attract some penalties. Some penalties include forfeiting the right to withhold any amount and meeting the costs of attorney fees and the lawsuit. 

What happens when a rental property changes ownership hands during an active tenancy? 

If you sell or buy a rental property with an active tenancy, there are two options to consider when handling the security deposit:

1. Return part or all of the deposit back to the tenant. 

2. Transfer all or part of the deposit to the new landlord.

Regardless of which option you choose, you must notify the tenant.

If you choose the second option, in the notice, you must state the amount transferred and the name and address of the incoming landlord. Once that's done, the security deposit becomes the responsibility of the incoming landlord.

Is there an alternative to the traditional security deposit?

Yes! While an upfront cash deposit is the traditional route for many property owners, there is now an alternative called Rhino Insurance.

Rhino security deposit insurance revolutionizes rental security measures, easing financial stresses for both landlords and tenants. Unlike traditional methods requiring hefty upfront deposits, Rhino offers an affordable insurance alternative where tenants pay a monthly premium.

For property owners, this comprehensive policy covers issues from property damage to missed rent, delivering peace of mind without financially straining tenants. This option is available for property owners working with our Osprey Property Management experts and alleviates the hassles associated with requiring an upfront deposit for investment properties.

Let the Best Property Management Hampton Roads Offers Handle Security Deposits and Tenants

If you have any further questions or need more assistance with security deposits or the Rhino Insurance alternative, please consider hiring professionals. Osprey Property Management can help you in all aspects of property management, including filling your vacancies, collecting rent, maintaining your property, handling your property's legal aspects, and so much more. Reach out to our team to learn more about our services!

Disclaimer: This blog is only informational and should not be referenced as a substitute for professional legal advice. Laws continuously change, and the information herein may not be updated at the time of your reading.