Question

According to the Virginia Landlord-Tenant Act, security deposits:?

1) Are 100
2) Must earn interest to the benefit of the tenant
3) Cannot exceed the equivalent of one month's rent
4) Must placed in an escrow account

Answer 1

The correct answer is option 3) Cannot exceed the equivalent of one month's rent.

Step-by-step explanation:

The Virginia Landlord-Tenant Act has specific provisions regarding security deposits. According to this legislation, a landlord may require a security deposit from a tenant, but there are regulations that must be followed:

1. A security deposit cannot exceed the equivalent of two months' rent. This is a cap set to prevent unreasonable security deposit demands.
2. The landlord is required to place the security deposit in an escrow account, ensuring that the funds are kept separate from the landlord's personal assets and are available to be returned to the tenant at the end of the lease term, subject to permissible deductions.
3. While the Virginia law does not mandate that security deposits must earn interest for the tenant, if the tenancy lasts longer than 13 months, the landlord is required either to pay interest on the security deposit at an annual rate equal to 4% below the Federal Reserve Board discount rate, or to provide insurance on the deposit through a surety bond or insurance policy for the benefit of the tenant. This requirement is to secure the tenant's funds against potential loss.

It is important for both landlords and tenants to understand these provisions to ensure compliance with the law and protect their respective interests during and after the rental agreement.