This article outlines common mistakes landlords make with security deposits in Washington, D.C., such as charging more than the legal limit, failing to return deposits on time, and not paying interest. It provides practical tips to stay compliant with D.C. law and avoid penalties.
If you're a landlord or property manager in Washington, D.C., handling security deposits properly is one of the most important parts of managing a rental. At Eva Realty, we’ve seen firsthand how even well-meaning landlords can run into trouble by overlooking small details. D.C. has specific rules around security deposits, and staying compliant is key to protecting both your tenants rights and your own peace of mind.
Here are the most common mistakes landlords make and how to avoid them.
D.C. law caps security deposits at one month’s rent. Not one and a half, not two, just one. This is a hard limit, and charging more is considered a violation.
This one trips up a lot of DIY landlords. In D.C., you’re required to hold the security deposit in an interest-bearing escrow account located in the District. The account must be separate from your personal or business operating funds.
Why? Because that money technically still belongs to the tenant until the lease ends, you're just holding it.
When you collect a security deposit, you must provide the tenant with a written receipt. This receipt needs to include:
Even if you’re using online payment systems, it’s smart to follow up with a formal email or printed document that clearly outlines the details.
D.C. law gives landlords 45 days after the end of the tenancy to return the security deposit (or provide a list of deductions). If you’re deducting for damages, you have 30 days from the move-out to send the list of damages and cost estimates. After that, the clock continues ticking, you still need to return the balance (if any) within 45 days total.
Missing this deadline can mean you forfeit your right to withhold anything, and the tenant may be entitled to the full deposit back, plus penalties.
Yep, tenants in D.C. are entitled to accrued interest on their security deposit. The rate is based on the average savings account rate at D.C. banks, updated yearly. You must return the deposit plus interest at the end of the lease.
Disputes often come down to documentation. If you’re not doing detailed move-in and move-out inspections, preferably with photos and signed checklists, it can be tough to justify withholding any part of the deposit.
A strong paper trail protects you and makes the entire process clearer for everyone involved.
D.C. takes tenant protections seriously, and security deposit rules are no exception. The good news is that with the right systems in place, it’s not hard to stay compliant. Whether you're managing one property or a whole portfolio, keeping on top of these details can save you from unnecessary headaches and potential legal trouble.
At Eva Realty, we help landlords stay ahead of these requirements so they can focus on what matters: keeping properties running smoothly and tenants happy. Have questions about handling deposits or other rental compliance issues? Get in touch with our team, we’re here to help.
