CHAPTER 11 - DAMAGES AND SECURITY DEPOSITS
Damage and security deposits are an effective—sometimes the only—means of securing a landlord against a breach of tenant duties. The law does not establish a limit on the amount a landlord may collect for a damage and security deposit. Thus, a landlord can require as much of a deposit as the market will allow. There are a number of absolute requirements for a landlord to collect, deposit, and refund or forfeit a deposit. A failure to comply with any of the requirements may result in the landlord having to return the entire damage and security deposit (despite the fact that the tenant may have defaulted in rent or caused extensive damage to the premises).
A. “Fees” versus “Deposits”
Landlords must not confuse “non-refundable fees” and “deposits.” A non-refundable fee is to reimburse a landlord for a specific expense. If a landlord collects any moneys from a tenant as a nonrefundable fee, the rental agreement must be in writing and it must clearly specify that the fee is non-refundable. RCW 59.18.285. A non-refundable fee belongs to the landlord when it is collected whereas a deposit is held in a trust account under property returned or forfeited in whole or in part. Typically non-refundable fees are for costs such as setting up a file or for cleaning curtains or carpets. Note that when a landlord charges a fee for cleaning curtains or carpets, the tenant is not under an obligation to clean the curtains or carpets when he or she vacates. RCW 59.18.130(10).
B. Requirements for Collecting and Holding Damage and Security Deposits
Because the Residential Landlord Tenant Act is in derogation of the common law, its provisions will be strictly construed in favor of the tenant. See, e.g. Housing Authority v. Terry.
The requirements for collecting damage and security deposits is found at RCW 59.18.260. In order to lawfully collect a damage and security deposit:
·The rental agreement must be in writing.
·The terms and conditions for withholding the deposit must be set forth in writing
·There must be a written condition checklist specifically describing the condition and existing damages of the walls, floors, fixtures, etc. in each room.
·The condition checklist must be done at the commencement of the tenancy;
·The checklist must be signed and dated by the landlord and the tenant; and
·The tenant must be provided with a copy of the signed checklist.
The requirements for holding a damage and security deposit are found at RCW 59.18.270. In order to lawfully hold a damage and security deposit:
·The landlord must promptly deposit the money into a separate account at a financial institution located in Washington State that is maintained for the purpose of holding such deposits.
·The landlord must provide a written receipt of the deposit to the tenant.
·The landlord must disclose the name, address and location of depository in writing to the tenant, and must notify the tenant if the money is transferred to another depository.
·If the rental property is sold, the landlord must notify the tenant in writing of the name, address and location of the new depository.
C. Properly Accounting for and Forfeiting/Returning Deposits
The requirements for forfeiting and returning damage and security deposits are found at RCW 59.18.270. In order to lawfully forfeit a damage and security deposit:
·The nature and extent of the damage claimed by the landlord must be provided for by the rental agreement.
·The amount claimed by the landlord is for damages in excess of “ordinary” wear and are calculated to reflect the landlord’s actual damages.
·The landlord must provide a full and specific statement for basis of retaining any portion of the deposit that must be mailed within 14 days after termination of the tenancy mailed within 14 days after landlord learns of abandonment.
·The landlord must include with the statement any refund due.
·The statement may be sent by first class mail (not certified or registered).
·The statement must be mailed to the tenant’s actual address if known or to the tenant’s last known address if actual address is unknown.
A landlord is not precluded from proceeding against a tenant to recover sums exceeding the amount of the damage and security deposit. See, James S. Black & Co. v. Charron. No portion of any deposit can be withheld on account of wear resulting from ordinary use of the premises. Also, unless otherwise agreed, a landlord is entitled to the interest earned on the deposit trust account. A landlord is barred, however, in any action brought by the tenant to recover the deposit from asserting any claim or raising any defense for retaining any of the deposit unless the landlord shows that circumstances beyond the landlord's control prevented the landlord from providing the statement within the fourteen days or that the tenant abandoned the premises as defined in RCW 59.18.310. The court may in its discretion award up to two times the amount of the deposit for the intentional refusal of the landlord to give the statement or refund due. In any action brought by the tenant to recover the deposit, the prevailing party shall additionally be entitled to the cost of suit or arbitration including a reasonable attorney's fee.