Overview
Washington D.C. security deposit laws are governed by D.C. Code § 42-3502.17 and the Security Deposit Act (D.C. Law 1-48). D.C. has strict tenant protections including mandatory interest-bearing escrow accounts, interest payments for tenancies over 12 months, and severe penalties including treble damages and fines up to $5,000. A security deposit compliance platform is critical for avoiding these steep penalties.
Maximum Security Deposit
In the District of Columbia, a security deposit cannot exceed one month's rent.
This cap is non-negotiable and applies regardless of the tenant's credit history or other risk factors.
Return Timeline
D.C. has a two-step return process: (Maryland landlords face similar—see Maryland security deposit laws.)
- Within 45 days after the tenancy ends, the landlord must either return the security deposit plus interest OR provide written notice of intent to withhold
- Within 30 days after that notification, the landlord must return any funds due along with an itemized statement of repairs and costs
Failure to provide timely notice or return can cause the landlord to forfeit any claim to the deposit, even if damages are legitimate.
Interest Requirements
D.C. has strict interest requirements for tenancies of 12 months or longer:
- Interest accrues at the statement savings rate prevailing on January 1st and July 1st
- The rate is based on the D.C. financial institution where the escrow account is held
- At the end of each calendar year, landlords must post in the building lobby and rental office where deposits are held and the prevailing rates
- At the end of tenancy, landlords must list the interest rate for each 6-month period during the tenancy
Storage Requirements
D.C. has strict storage requirements:
- Deposits must be held in an interest-bearing escrow account
- The account must be in a financial institution in the District of Columbia
- The institution must be insured by a federal or state agency
- Landlords must provide tenants with the name and address of the financial institution
Allowable Deductions
Landlords may only withhold a security deposit for reasons specified in writing at the beginning of the tenancy (usually in the lease). Typical deductions include:
- Damages beyond normal wear and tear
- Unpaid rent
Landlords may not withhold for replacement value of items damaged due to ordinary wear and tear.
Penalties for Non-Compliance
D.C. has some of the strongest penalties in the nation:
- Treble damages (3x the amount owed) for bad faith failure to pay interest
- Civil fines of up to $5,000 per violation for willful violations
- Landlords who fail to return deposits or provide notice may forfeit all claims to the deposit
- Attorney's fees may be awarded to prevailing tenants
Common Compliance Questions
What counts as "normal wear and tear"?
Normal wear and tear includes minor scuffs on walls, slightly worn carpet in high-traffic areas, small nail holes from hanging pictures, and faded paint from sunlight. It does not include large holes in walls, stained or burned carpet, broken fixtures, or damage from pets. When in doubt, document the condition at move-in with dated photos.
How should I document the unit's condition?
Complete a detailed move-in checklist with the tenant, noting existing damage, appliance conditions, and overall cleanliness. Take timestamped photos or video of every room. At move-out, repeat the process. This documentation protects both parties and makes deduction decisions defensible if disputed. Schedule a demo to learn how Passive handles documentation automatically.
Can I deduct for unpaid utility bills?
Only if your lease specifically allows it and the utilities are in your name. If utilities are in the tenant's name, contact the utility company directly—they have their own collection processes. Never make unauthorized deductions, even for amounts you believe the tenant owes.