Virginia has a number of specifics regarding security deposits that the landlord must pay attention to.

Amount and Prepaid Rent

The amount of the security deposit must not exceed two months’ rent. There is also a stipulation about prepaid rent, if accepted. Per Code § 55-248.7:1, the landlord and tenant may agree that the tenant will pay prepaid rent. Any prepaid rent received by the landlord must be deposited in an escrow account in a federally insured depository in Virginia by the end of the fifth business day following receipt. The prepaid rent must remain in the escrow account until the prepaid rent becomes due. Furthermore, unless the landlord has otherwise become entitled to receive any portion of the prepaid rent, it can not be removed from the escrow account without the written consent of the tenant.

Allowable Charges and Inspection After Move-out

A security deposit is mainly used for any damage beyond normal wear and tear, but there are other specific uses for a security deposit. The landlord may apply the security deposit toward any breach of the rental agreement including: damage to the premises, any of the buildings, common areas, parking areas, furniture, fixtures, carpet, or appliances; abandonment of the premises; nonpayment of rent; late charges; and attorney’s fees. In addition, the tenant may not apply the security deposit to the last month’s rent or any other charges incurred.

The landlord must make a reasonable effort to inform the tenant of their right to be present at the landlord’s inspection.

The landlord will conduct an inspection of the premises at the end of the tenancy, typically after move-out. The landlord must make a reasonable effort to inform the tenant of their right to be present at the landlord’s inspection. If the tenant wishes to be present at the inspection they must notify the landlord in writing, and the landlord must notify the tenant of the time and date, which must be made within 72 hours of delivery of possession to the landlord. After the inspection the landlord must give the tenant an itemized list of damages.

Return of Security Deposit

After the tenant moves out and the inspection is complete the landlord must send the tenant a written notification of any deductions made to the security deposit. For that reason the tenant should provide the landlord with a forwarding address. The written notification by the landlord must be made within 30 days and shall itemize the reasons for the deductions. And within 45 days of move-out the landlord shall return the security deposit with the itemized security deposit settlement statement listing any deductions. When there is more than one tenant the landlord must return the security deposit via one check payable to all tenants, mailed to the forwarding address. Finally, interest is not due and payable on the security deposit.

“Escheat to Commonwealth”

What happens if the tenant does not provide a forwarding address? Per Code § 55-248.15:1, if the tenant does not provide a forwarding address, then one year from the date of the end of the 45-day time period for returning the deposit, the landlord must within 90 days escheat (transfer) the balance of the security deposit to the Commonwealth, sent to the Virginia Department of Housing and Community Development, payable to the State Treasurer and credited to the Virginia Housing Trust Fund established pursuant to Code § 36-142. After payment to the Commonwealth, the landlord has no further liability to the tenant relative to the security deposit.