Disputes over security deposits are one of the main issues between landlords and tenants. Renters in Washington need to be familiar with state security deposit laws meant to protect them. There are nine basic issues every landlord and tenant in Washington should understand.
Washington does not set a limit on how much landlords can charge tenants as a security deposit. They are free to charge $1 or $1 million. Luckily for tenants, the market demands what is reasonable, and most landlords charge between one and two months' rent.
Washington landlords must have written leases or rental agreements with tenants, and the reasons they can withhold all or a portion of a tenant’s security deposit must be included in this agreement. Landlords also must provide a written checklist detailing the condition and cleanliness of the property and any existing damage.
Landlords and tenants both must sign and date the statement, and tenants must receive a copy of this checklist.
Tenants could be entitled to a return of their security deposits, plus reasonable court costs and attorney's fees, if landlords do not include a written checklist.
Landlords in Washington are not allowed to make security deposits nonrefundable, but they can charge separate nonrefundable fees. For example, a nonrefundable fee could be charged for having a pet in the property.
Landlords can charge a nonrefundable fee only if it is clearly spelled out in the lease or rental agreement what the fee is for and that it is nonrefundable. If this is not done, a nonrefundable fee becomes a deposit and must be returned at the termination of tenancy.
Storing Security Deposits
Washington landlords have three different options for storing tenants' security deposits:
- A trust account set up by the landlord that is only for tenants’ security deposits.
- An account in a state or national financial institution, which includes banks, trust companies, savings and loan associations, and credit unions
- Place them with an escrow agent who is licensed and located within the state of Washington
If a deposit is placed in an interest-bearing account, landlords get the interest unless they agree in writing to different terms with their tenants.
After collecting and depositing security deposits, Washington landlords must provide tenants with written notice. The notice must include a written receipt with the amount of the deposit and the name and address of the institution where the deposit is being held.
If landlords move a security deposit to a different institution, they must again notify tenants in writing with the name and address where the deposit is now being held.
Keeping Security Deposits
Landlords may be able to make deductions from a tenant’s security deposit to cover unpaid rent, damage in excess of normal wear and tear, or other breaches of the lease agreement.
Walk-through inspections are not required before tenants move out in the state of Washington. However, landlords and tenants are required to sign off on a checklist describing the condition of the property before a landlord can collect a security deposit at the beginning of tenancy.
Returning Security Deposits
Landlords in Washington have 14 days from the date of lease termination or a tenant's move-out date to return the portion of the security deposit owed to the tenant. If applicable, landlords must include a written notice stating the amount of money being withheld and why. With this statement, they must return the portion of the security deposit, if any, that is due back to the tenant.
Landlords must mail or hand-deliver these documents to the last known address of a tenant. Landlords who fail to follow these rules may have to return the entire security deposit even if deductions would have been allowed.
If a tenant's security deposit does not cover the amount of money a landlord is owed, the landlord can sue to recover the full amount.
Landlords who wrongfully withhold all or a portion of a tenant’s security deposit may be liable for paying up to two times the tenant’s security deposit, plus court costs and reasonable attorney’s fees.
Selling Rental Properties
When landlords in Washington sell or otherwise transfer ownership of an investment property, they must transfer all tenants’ security deposits to the new owner. New owners are responsible for placing deposits in a proper financial or trust account and for notifying all tenants in writing of the name and address where their deposits are now being held.