Security Deposit Laws in Washington, D.C.

The laws concerning security deposits in Washington, D.C. are fairly tenant-friendly (and written in easy-to-understand language, if you’re interested in diving into the law yourself). Landlords can’t ask for more than one month’s rent and must pay the tenant interest on their deposit at the end of the lease. That said, D.C. law says landlords can wait between 45 and 75 days to return a deposit—quite a bit longer than in other states.

Security deposits are limited to one month’s rent

D.C. law bans landlords from asking for a security deposit that is greater than the cost of one month’s rent.¹

Landlords must update the tenants about the status of their deposit

Either in the lease itself, or on a receipt for the deposit, the landlord must clearly state when they received the deposit and where it will be stored.¹

Also, at the end of every calendar year, the landlord is required to post a notice in the lobby of the rental building. This notice must mention where the tenants’ deposits are being stored and the rate of interest earned on those deposits for each of the last two six-month periods.

Deposits must be stored promptly in a dedicated account

Within 30 days of receiving a deposit, the landlord must place the money into an escrow account. The law lists several requirements for this account:¹

• It must be used solely for holding security deposits—the landlord cannot mix their own money with that of their tenants
• It must be in an insured financial institution that’s based in Washington, D.C.
• It must earn interest (more on this in the next section)

D.C. law includes strict rules about how interest is calculated and paid

Tenants are entitled to the interest earned on their security deposits, unless the landlord uses it to pay valid costs. D.C. law actually places some fairly strict regulations on how that interest is handled.

First, interest must be calculated with the assumption that it started accruing on the actual date the tenant gave the deposit to the landlord, not the date the landlord deposited it. Second, interest must accrue at the rate that “statement savings” accounts at the financial institution typically accrue interest. The landlord is free to use an account with a higher interest rate, and if he does so, he is allowed to keep 30% of the “extra” interest earned, as an administrative fee.⁴

If a landlord refuses to pay interest to a tenant in “bad faith”—essentially, that they did so with no valid reason—the landlord must pay the tenant three times the amount of interest owed. If the landlord does this “willfully”—a legal term meaning that they did it with the understanding that they were breaking the law—the landlord may also be subject to a civil fine of $5,000.⁴

Landlords may schedule an inspection before the lease ends

Within three days of the end of a lease—either before the lease ends, or after—a landlord has the right to inspect a premises to determine whether any deductions will be made from the deposit.² But even if no inspection is made, a landlord can still deduct from the deposit for valid reasons.

So, what’s the point of the inspection? Say a landlord has scheduled a new tenant to move in on the same day that the old tenant is moving out. They might want to take advantage of their right to inspect the apartment several days before the current lease is up, in order to proactively deal with any minor repairs.

Acceptable deductions are determined by the lease, not the law

D.C. law says to “look to the lease” when determining the reasons a landlord is allowed to deduct from the security deposit, rather than listing the reasons in a statute.³ Every lease spells out a tenant’s obligations—things like paying rent or keeping the apartment in good condition. If the tenant costs the landlord money by not living up to those obligations, the landlord can deduct from the deposit to reimburse themselves. This includes repaying any rent the tenant has not paid.

Tenants should review leases carefully in D.C. to see what condition an apartment must be in when the lease is up. While a “standard” lease should state that a tenant is not liable for normal wear and tear, there’s a possibility it may not. A tenant is only protected from deductions for wear and tear if that provision is in their lease, as one older court case demonstrates.⁵ (The decision in Tirrell v. Osborn is worth reading in full, if only to see how difficult it can be for a court to decide what does and does not constitute “ordinary wear and tear.”)

Landlords can take as long as 75 days to return a deposit

If a landlord returns a tenant’s deposit in full, they have 45 days after the lease is up to send the money.

However, if the landlord decides to withhold any of the deposit, they have 45 days to notify the tenant by mail that they plan to make deductions from the deposit. (This notice must be sent to the tenant’s last known address.) Then, within 30 days of sending the notice, the landlord must return the remaining portion of the deposit to the tenant, along with an itemized list of expenses required to repair the damage caused by the tenant. If the landlord’s expenses exceed the amount of the deposit, the landlord is allowed to keep the interest earned on the deposit as reimbursement.

If the landlord doesn’t follow the timeline set out by D.C. law, they are no longer allowed to withhold any of the deposit—or any interest earned on it.³

Related articles

[1] 14 District of Columbia Municipal Regulations § 308

[2] 14 District of Columbia Municipal Regulations § 310

[3] 14 District of Columbia Municipal Regulations § 309

[4] 14 District of Columbia Municipal Regulations § 311

[5] Tirrell v. Osborn, Municipal Court of Appeals for the District of Columbia, Dec 5, 1947