                                 CODE OF VIRGINIA

SECURITY DEPOSITS (§ 55.1-1226)

A. No landlord may demand or receive a security deposit, however denominated, in
an amount or value in excess of two months&#8217; periodic rent. Upon
termination of the tenancy or the date the tenant vacates the dwelling unit,
whichever occurs last, such security deposit, whether it is property or money
held by the landlord as security as provided in this section, may be applied by
the landlord solely to (i) the payment of accrued rent, including the reasonable
charges for late payment of rent specified in the rental agreement; (ii) the
payment of the amount of damages that the landlord has suffered by reason of the
tenant&#8217;s noncompliance with &#xA7; 55.1-1227, less reasonable wear and
tear; (iii) other damages or charges as provided in the rental agreement; or
(iv) actual damages for breach of the rental agreement pursuant to &#xA7;
55.1-1251. The security deposit and any deductions, damages, and charges shall
be itemized by the landlord in a written notice given to the tenant, together
with any amount due to the tenant, within 45 days after the termination date of
the tenancy or the date the tenant vacates the dwelling unit, whichever occurs
last. As of the date of the termination of the tenancy or the date the tenant
vacates the dwelling unit, whichever occurs last, the tenant shall be required
to deliver possession of the dwelling unit to the landlord. If the termination
date is prior to the expiration of the rental agreement or any renewal thereof,
or the tenant has not given proper notice of termination of the rental
agreement, the tenant shall be liable for actual damages pursuant to &#xA7;
55.1-1251, in which case, the landlord shall give written notice of security
deposit disposition within the 45-day period but may retain any security balance
to apply against any financial obligations of the tenant to the landlord
pursuant to this chapter or the rental agreement. If the tenant fails to vacate
the dwelling unit as of the termination of the tenancy, the landlord may file an
unlawful detainer action pursuant to &#xA7; 8.01-126.

B. Where there is more than one tenant subject to a rental agreement, unless
otherwise agreed to in writing by each of the tenants, disposition of the
security deposit shall be made with one check being payable to all such tenants
and sent to a forwarding address provided by one of the tenants. The landlord
shall make the security deposit disposition within the 45-day time period
required by subsection A, but if no forwarding address is provided to the
landlord, the landlord may continue to hold such security deposit in escrow. If
a tenant fails to provide a forwarding address to the landlord to enable the
landlord to make a refund of the security deposit, upon the expiration of one
year from the date of the end of the 45-day time period, the landlord may remit
such sum to the State Treasurer as unclaimed property on a form prescribed by
the administrator that includes the name; social security number, if known; and
last known address of each tenant on the rental agreement. If the landlord or
managing agent is a real estate licensee, compliance with this subsection shall
be deemed compliance with &#xA7; 54.1-2108 and corresponding regulations of the
Real Estate Board.

C. Nothing in this section shall be construed by a court of law or otherwise as
entitling the tenant, upon the termination of the tenancy, to an immediate
credit against the tenant&#8217;s delinquent rent account in the amount of the
security deposit. The landlord shall apply the security deposit in accordance
with this section within the 45-day time period required by subsection A.
However, provided that the landlord has given prior written notice in accordance
with this section, the landlord may withhold a reasonable portion of the
security deposit to cover an amount of the balance due on the water, sewer, or
other utility account that is an obligation of the tenant to a third-party
provider under the rental agreement for the dwelling unit, and upon payment of
such obligations the landlord shall provide written confirmation to the tenant
within 10 days, along with payment to the tenant of any balance otherwise due to
the tenant. In order to withhold such funds as part of the disposition of the
security deposit, the landlord shall have so advised the tenant of his rights
and obligations under this section in (i) a termination notice to the tenant in
accordance with this chapter, (ii) a written notice to the tenant confirming the
vacating date in accordance with this section, or (iii) a separate written
notice to the tenant at least 15 days prior to the disposition of the security
deposit. Any written notice to the tenant shall be given in accordance with
&#xA7; 55.1-1202.
			The tenant may provide the landlord with written confirmation of the payment
of the final water, sewer, or other utility bill for the dwelling unit, in which
case the landlord shall refund the security deposit, unless there are other
authorized deductions, within the 45-day period required by subsection A. If the
tenant provides such written confirmation after the expiration of the 45-day
period, the landlord shall refund any remaining balance of the security deposit
held to the tenant within 10 days following the receipt of such written
confirmation provided by the tenant. If the landlord otherwise receives
confirmation of payment of the final water, sewer, or other utility bill for the
dwelling unit, the landlord shall refund the security deposit, unless there are
other authorized deductions, within the 45-day period.

D. Nothing in this section shall be construed to prohibit the landlord from
making the disposition of the security deposit prior to the 45-day period
required by subsection A and charging an administrative fee to the tenant for
such expedited processing, if the rental agreement so provides and the tenant
requests expedited processing in a separate written document.

E. The landlord shall notify the tenant in writing of any deductions provided by
this section to be made from the tenant&#8217;s security deposit during the
course of the tenancy. Such notification shall be made within 30 days of the
date of the determination of the deduction and shall itemize the reasons in the
same manner as provided in subsection F. No such notification shall be required
for deductions made less than 30 days prior to the termination of the rental
agreement. If the landlord willfully fails to comply with this section, the
court shall order the return of the security deposit to the tenant, together
with actual damages and reasonable attorney fees, unless the tenant owes rent to
the landlord, in which case the court shall order an amount equal to the
security deposit credited against the rent due to the landlord. In the event
that damages to the premises exceed the amount of the security deposit and
require the services of a third-party contractor, the landlord shall give
written notice to the tenant advising him of that fact within the 45-day period
required by subsection A. If notice is given as prescribed in this subsection,
the landlord shall have an additional 15-day period to provide an itemization of
the damages and the cost of repair. This section shall not preclude the landlord
or tenant from recovering other damages to which he may be entitled under this
chapter. The holder of the landlord&#8217;s interest in the premises at the time
of the termination of the tenancy, regardless of how the interest is acquired or
transferred, is bound by this section and shall be required to return any
security deposit received by the original landlord that is duly owed to the
tenant, whether or not such security deposit is transferred with the
landlord&#8217;s interest by law or equity, regardless of any contractual
agreements between the original landlord and his successors in interest.

F. The landlord shall:

   1. Maintain and itemize records for each tenant of all deductions from
   security deposits provided for under this section that the landlord has made
   by reason of a tenant&#8217;s noncompliance with &#xA7; 55.1-1227, or for any
   other reason set out in this section, during the preceding two years; and

   2. Permit a tenant or his authorized agent or attorney to inspect such
   tenant&#8217;s records of deductions at any time during normal business hours.

G. Upon request by the landlord to a tenant to vacate, or within five days after
receipt of notice by the landlord of the tenant&#8217;s intent to vacate, the
landlord shall provide written notice to the tenant of the tenant&#8217;s right
to be present at the landlord&#8217;s inspection of the dwelling unit for the
purpose of determining the amount of security deposit to be returned. If the
tenant desires to be present when the landlord makes the inspection, he shall,
in writing, so advise the landlord, who in turn shall notify the tenant of the
date and time of the inspection, which must be made within 72 hours of delivery
of possession. Following the move-out inspection, the landlord shall provide the
tenant with a written security deposit disposition statement, including an
itemized list of damages. If additional damages are discovered by the landlord
after the security deposit disposition has been made, nothing in this section
shall be construed to preclude the landlord from recovery of such damages
against the tenant, provided, however, that the tenant may present into evidence
a copy of the move-out report to support the tenant&#8217;s position that such
additional damages did not exist at the time of the move-out inspection.

H. If the tenant has any assignee or sublessee, the landlord shall be entitled
to hold a security deposit from only one party in compliance with the provisions
of this section.

I. The landlord may permit a tenant to provide damage insurance coverage in lieu
of the payment of a security deposit. Such damage insurance in lieu of a
security deposit shall conform to the following criteria:

   1. The provider of damage insurance is licensed or approved by the Virginia
   State Corporation Commission;

   2. The coverage is effective upon the payment of the first premium and remains
   effective for the entire lease term;

   3. The coverage provided per claim is no less than the amount the landlord
   requires for security deposits;

   4. The provider of damage insurance agrees to approve or deny payment of a
   claim; and

   5. The provider of damage insurance shall notify the landlord within 10 days
   if the damage policy lapses or is canceled.

J. A tenant who initially opts to provide damage insurance in lieu of a security
deposit may, at any time without consent of the landlord, opt to pay the full
security deposit to the landlord in lieu of maintaining a damage insurance
policy. The landlord shall not alter the terms of the lease in the event a
tenant opts to pay the full amount of the security deposit pursuant to this
subsection.

HISTORY: 2000, cc. 760, 761, § 55-248.15:1; 2001, c. 524; 2003, c. 438; 2007,
c. 634; 2010, c. 550; 2013, c. 563; 2014, c. 651; 2015, c. 596; 2017, c. 730;
2018, c. 221; 2019, c. 712; 2020, cc. 384, 823, 998; 2021, Sp. Sess. I, c. 427;
2023, cc. 433, 434.