Conditions Required to Collect a Security Deposit at Move-In
Both state and local laws regulate the collection of security deposits from tenants at move in. These conditions will be scrutinized if the deposit refund is disputed, so it is important to check all of these boxes when collecting a deposit at the beginning of a tenancy.
Ensure The Lease Agreement Includes Conditions Required For Full Refund
Washington law (RCW 29.18.260) requires housing providers to include conditions for a full refund in the rental agreement or lease to legally collect a deposit. All RHAWA leasing forms include these details under section 3, Deposit. Read section 3 carefully to understand tenant and housing provider obligations. It is important that deposits are always fully refundable if the tenant meets the conditions. Avoid policies such as charging a flat fee for cleaning no matter how clean the tenant leaves the property at move out.
Keep A Copy Of The Property Condition Checklist signed By The Tenant
Washington law (RCW 29.18.260) requires the housing provider to include a detailed move-in condition checklist with the lease to legally collect a deposit. This checklist must be signed and dated by the housing provider and the tenant. Best practice is to fill in details of property condition prior to move in, then have the tenant review and sign, making any notes or modifications based on their own inspection of the property at move in.
Keep Deposit Funds In A Separate Trust Account
Washington law (RCW 29.18.270) requires the housing provider to hold the deposit in a separate trust account disclosed to the tenant. Keep in mind, your local bank will likely be confused if you ask them to set up a “trust account” for your rental deposits. A regular checking or savings bank account meets the state requirement. Simply label the account "Trust account for tenant deposits" and use it only for tenant deposits. The purpose is to identify that the money in this account does not belong to the landlord, but to the tenants. Therefore, if the landlord’s bank accounts were frozen based on a judgement against them, tenant deposits would not be affected.
Allow The Tenant To Pay In Installments If Requested
If they requested it, the tenant must be permitted to pay the deposit in installments, per RCW 59.18.610. State law allows the tenant a minimum payment plan of three monthly installments for lease terms of three months or greater, or two installments for terms less than three months. Attach the RHAWA addenda form Deposit Payment Schedule (WA) to your lease if the tenant requests this option. Some local governments, including Kenmore, Kirkland, King County, and Seattle allow the tenant more generous terms. Use the RHAWA addenda form Deposit Payment Schedule (Extended) in these areas.
Follow Local Laws That Limit The Amount Of The Deposit
Several local governments including Auburn, Kenmore, Kirkland, King County, and Redmond, limit the total amount of deposit and fees that can be collected at move-in to one month's rent.
Olympia does not allow any non-refundable fees, limits general security deposits to one month’s rent and limits pet deposit to 25% of rent.
Seattle requires that the combined total of the security deposit, non-refundable screening fee (paid directly to Owner/Agent), and/or move-in cleaning fees may not exceed the amount of the total first full month’s rent). Within that total, non-refundable fees may not exceed 10% of rent, and cannot be charged for anything other than screening and cleaning. An additional maximum of 25% of rent can be charged as a pet deposit, regardless of the number of pets. However, the pet policy can limit the number of pets allowed.
The deposit should be kept in the trust account and not accessed until the tenant moves out. After assessing any damages owned by the tenant, the accounting and any refund must be returned to the tenant with in 21 days of move out. See Support Center article, Send Deposit Accounting and Refund at Move Out for more information.
©2022 Rental Housing Association of Washington | www.RHAwa.org. This article was written and edited by RHAWA representatives and is intended for the use of RHAWA members only. Copyrighted members-only materials may not be further disseminated. Formal legal advice and review is recommended prior to selection and use of this information. RHAWA does not represent your selection or execution of this information as appropriate for your specific circumstance. The material contained and represented herein, although obtained from reliable sources, is not considered legal advice or to be used as a substitution for legal counsel.