Deposit Record Statute-cited public record

Does a Virginia Landlord Have to Pay Interest on a Security Deposit?

No statute makes interest accrue on a Virginia deposit today. An uncodified clause of a 2014 act ended deposit interest from January 1, 2015; interest that had built up on an older deposit by the end of 2014 is still payable "no later than 45 days after termination of tenancy and delivery of possession", in the 2014 clause’s own words, which are not the trigger of today’s 45 days. The Act does not require a landlord to keep a deposit in a separate account either, though prepaid rent must be escrowed, and a real estate licensee holding a deposit for a landlord has escrow duties of its own. This page covers both, and what happens to the deposit when the property is sold. Statutes verified November 12, 2026.

No statute makes interest accrue on a deposit today

Nothing in the Virginia Residential Landlord and Tenant Act requires interest on a security deposit today, and the Act has required none since January 1, 2015. What ended it is a 2014 act, and the part that matters never became part of the Code:

4. That on or after January 1, 2015, there shall be no interest due and payable on security deposits of a tenant held under the Virginia Residential Landlord Tenant Act (§ 55-248.2 et seq.) of the Code of Virginia (the Act). Any accrued interest due and payable as of December 31, 2014, on security deposits of a tenant held under the Act shall be paid to such tenant no later than 45 days after termination of tenancy and delivery of possession as otherwise provided in § 55-248.15:1 of the Code of Virginia. 2014 Va. Acts ch. 651, cl. 4

The same act struck the duty to accrue interest from the deposit section itself and repealed the interest-rate schedule from January 1, 2015. The clause above was left uncodified, which is why the Code alone cannot show that deposit interest has ended.

The clause names the Act by its old section numbers, and its timing words, “termination of tenancy and delivery of possession”, are those of the repealed section it points to. They are not the trigger for today’s 45 days, which run from the later of the termination date of the tenancy and the date the tenant vacates; the deadline guide covers that clock.

Interest built up before 2015 is still payable

The clause’s second sentence is still a live duty for a deposit held since before 2015: interest that had accrued by December 31, 2014 must be paid to the tenant “no later than 45 days after termination of tenancy and delivery of possession”, in the clause’s own words, which, as the note above says, are not the trigger of today’s 45 days. It matters only for old deposits. Under the repealed rate schedule the rate was 0.00% for every year from 2009 through 2014, 0.75% for 2008 and 5.25% for 2007, and under the old section no interest was payable at all unless the deposit had been held for more than 13 months. So the amount can be more than zero only for a deposit held since 2008 or earlier.

This tool does not compute that amount, and we have not verified how it works out for any real tenancy. The old schedule is printed in the 2014 act. If you still hold a deposit from 2008 or earlier, the figure is a question for a licensed Virginia attorney.

Why the 2019 renumbering did not, by itself, undo it

The 2014 clause names the Act by its old Title 55 numbers, and in 2019 the Act was recodified as Title 55.1, where the deposit section is now § 55.1-1226. Under § 30-152, repealing a section in a recodification and replacing it with a renumbered one does not, by itself, affect an uncodified enactment the old section took effect with; to repeal the enactment, the recodification bill has to say so expressly.

One limit on what we checked: we have not read the 2019 recodification act’s own enactment clauses to confirm it contains no such express repeal. For a tenancy that began in 2015 or later the answer does not depend on that point, because no statute in force makes interest accrue.

Why the Code still says “accrued interest”

At least four sections of the Code that reach residential deposits still speak of accrued interest on a deposit (a fifth, § 55.1-1405, says the same for nonresidential property): the transfer-on-sale sections (§ 55.1-1213, and § 55.1-1317 for manufactured home parks), the fire-or-casualty section (§ 55.1-1240) and a real estate licensing section on foreclosures (§ 54.1-2108.1(A)(3)). The fire-or-casualty section reads:

If the rental agreement is terminated, the landlord shall return all security deposits in accordance with § 55.1-1226 and prepaid rent, plus accrued interest, recoverable by law Va. Code § 55.1-1240

Each was written when Virginia deposits earned interest by statute. No statute in force now makes a deposit accrue interest, so on our reading these words, as applied to a deposit, reach only interest that had accrued by the end of 2014, which the 2014 act keeps payable, and create no duty of their own.

That reading has a limit. In the fire-or-casualty section quoted above, the words follow “prepaid rent”, which must be held in an escrow account (§ 55.1-1205, below), so there they may also reach interest actually earned on escrowed prepaid rent. We do not decide that.

Does the deposit have to be in a separate account?

Not under the Act, which does not require a landlord to keep a security deposit in a separate account. That is a finding of absence, so here is what it rests on: the words “trust account”, and any form of “commingle”, appear nowhere in the Act, and “escrow” appears in the deposit section only where a landlord with no forwarding address may continue to hold the deposit:

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. Va. Code § 55.1-1226(B)

That sentence lets the landlord keep holding the money; it does not move the 45 days, and the written notice is still due by day 45. The deposit section does not say what kind of account “escrow” means there.

Prepaid rent is different

Prepaid rent has to be escrowed, on a deadline:

If a landlord receives prepaid rent, it shall be placed in an escrow account in a federally insured depository authorized to do business in Virginia by the end of the fifth business day following receipt and shall remain in the account until such time as the prepaid rent becomes due. Va. Code § 55.1-1205

“Rent” in the Act includes “prepaid rent paid more than one month in advance of the rent due date”. Whether a payment labelled “last month’s rent” is prepaid rent or a security deposit “however denominated” is not something we found decided, and this page does not classify it.

A real estate licensee holding the deposit

Deposits paid to a real estate licensee acting for a landlord are different too:

2. Any security deposits paid to a real estate licensee acting on behalf of a landlord client in connection with the lease shall be placed in an escrow account by the end of the fifth business banking day following receipt, unless otherwise agreed to in writing by the principals to a lease transaction. Va. Code § 54.1-2108.1(B)(2)

The Real Estate Board’s escrow regulation, 18VAC135-20-181, has been in force since April 1, 2026 and adds the account rules: federally insured escrow accounts in the name under which the firm is licensed, labelled “escrow”, and no commingling of a client’s money with the broker’s own. The older section, 18VAC135-20-180, is repealed, so a guide that cites it is out of date. If the landlord or managing agent is a real estate licensee, compliance with subsection B of the deposit section is deemed compliance with § 54.1-2108 and the Board’s corresponding regulations (§ 55.1-1226(B)). These rules bind licensees, not a landlord who manages the rental without one.

An interest-bearing escrow account

A licensee’s escrow account may bear interest. If the licensee holds the deposit in one, the regulation requires the lease to disclose to the parties how the interest is paid out (18VAC135-20-181(B)(3)). It requires that disclosure; it does not itself say who receives the interest.

Alexandria’s charter and 4 percent interest

One loose end. The Alexandria city charter still gives that city power to pass a security deposit ordinance of its own, and the terms it lists include interest of four percent a year on deposits of $100 or more held more than a year. It is a power to pass an ordinance, not a rule in force: Alexandria’s code, codified through Ordinance No. 5616 (adopted January 24, 2026), contains the charter section and nothing we found that enacts the power. The Act says it supersedes all other local ordinances or regulations on landlord and tenant relations and the leasing of residential property (§ 55.1-1201(E)), but a charter is a special act of the General Assembly, not an ordinance, and whether the power survives the Act is a question for a lawyer. In Alexandria we found no city deposit rule beyond the state rules on this page.

Selling the property

When rental property is sold, the current owner must hand the deposits over to the new owner at the time of the transfer:

The current owner of rental property shall transfer any security deposits and any accrued interest on the deposits in his possession to the new owner at the time of the transfer of the rental property. Va. Code § 55.1-1213

Where a managing agent holds the deposits under a written property management agreement, the owner must ask the agent in writing, before settlement, to pay them over to the owner; the agent then does so and tells each tenant in writing that the deposit has been transferred to the new owner. The “accrued interest” in that section is wording from before 2015 (above).

The new owner is bound whether or not the money arrives:

The holder of the landlord'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's interest by law or equity, regardless of any contractual agreements between the original landlord and his successors in interest. Va. Code § 55.1-1226(E)

So a buyer of rented property is bound for the deposits whether or not the seller hands them over, and a contract between the two does not change that. Neither section says the seller is released. A real estate licensing statute says the same for a single-family home sold at foreclosure with a tenant in place (§ 54.1-2108.1(A)(3)).

Work out a Virginia deposit return

The free Virginia deposit tool works out your 45-day deadline from the later of the termination date of the tenancy and the date the tenant vacates, and generates a statute-cited return letter, all in your browser with nothing stored. It adds no interest, and it does not compute interest built up before 2015 on an older deposit. What may come out of the deposit is in the deductions guide, and how much you may take in the first place is in the deposit limits guide.

Virginia security deposit interest and escrow: common questions

Does a Virginia landlord have to pay interest on a security deposit?

No statute makes interest accrue on a Virginia deposit today, but interest built up before 2015 on an older deposit is still payable. An uncodified clause of a 2014 act ended deposit interest from January 1, 2015, and kept one duty alive: interest that had accrued by December 31, 2014 on a deposit held since before then must still be paid to the tenant "no later than 45 days after termination of tenancy and delivery of possession", in the 2014 clause’s own words. Those words name the old section’s trigger; they are not the trigger of today’s 45 days. Under the repealed rate schedule the rate was 0.00% for every year from 2009 through 2014, so the amount can be more than zero only for a deposit held since 2008 or earlier. The Code still says "accrued interest" in at least four sections that reach residential deposits; on our reading that wording, as applied to a deposit, is left over from the old rules and creates no duty of its own. In the fire-or-casualty section the words follow "prepaid rent", which must be held in escrow, so there they may also reach interest actually earned on escrowed prepaid rent; we do not decide that. (2014 Va. Acts ch. 651, cl. 4; Va. Code §§ 55.1-1240, 55.1-1205)

Is interest owed on a Virginia security deposit paid before 2015?

It can be, on a deposit held since 2008 or earlier. A 2014 act ended deposit interest from January 1, 2015, but kept interest that had accrued by December 31, 2014 payable to the tenant "no later than 45 days after termination of tenancy and delivery of possession", in the 2014 clause’s own words, which are not the trigger of today’s 45 days. Under the repealed rate schedule the rate was 0.00% for every year from 2009 through 2014, 0.75% for 2008 and 5.25% for 2007, and under the old section no interest was payable at all unless the deposit had been held for more than 13 months, so the amount can be more than zero only for a deposit held since 2008 or earlier. This tool does not compute that amount. (2014 Va. Acts ch. 651, cl. 4)

Why does the Virginia Code still mention accrued interest on security deposits?

At least four sections that reach residential deposits were written when Virginia deposits earned interest by statute and still carry the words: the transfer-on-sale sections (§ 55.1-1213, and § 55.1-1317 for manufactured home parks), the fire-or-casualty section (§ 55.1-1240) and a real estate licensing section on foreclosures (§ 54.1-2108.1(A)(3)). No statute in force now makes a deposit accrue interest, so on our reading the words, as applied to a deposit, reach only interest that had accrued by the end of 2014, which the 2014 act keeps payable, and they create no duty of their own. That reading has a limit: in the fire-or-casualty section the words follow "prepaid rent", which must be held in an escrow account (§ 55.1-1205), so there they may also reach interest actually earned on escrowed prepaid rent; we do not decide that. (Va. Code §§ 55.1-1213, 55.1-1240, 55.1-1317, 54.1-2108.1(A)(3), 55.1-1205; 2014 Va. Acts ch. 651, cl. 4)

Does a Virginia landlord have to keep the security deposit in a separate account?

The Act does not require it. The words "trust account", and any form of "commingle", appear nowhere in the Act, and "escrow" appears in the deposit section only where a landlord with no forwarding address may continue to hold the deposit. Two things are different. Prepaid rent must be placed in an escrow account in a federally insured depository authorized to do business in Virginia by the end of the fifth business day after it is received. And a real estate licensee acting for a landlord must place security deposits in an escrow account by the end of the fifth business banking day after receipt, unless the parties to the lease agree otherwise in writing. Whether a payment labelled "last month’s rent" is prepaid rent or a security deposit is not something we found decided. (Va. Code §§ 55.1-1205, 55.1-1226(B), 54.1-2108.1(B)(2))

Does a real estate licensee have to escrow a Virginia security deposit?

Yes. A real estate licensee acting for a landlord must place security deposits in an escrow account by the end of the fifth business banking day after receipt, unless the principals to the lease agree otherwise in writing. The Real Estate Board’s escrow regulation, 18VAC135-20-181, in force since April 1, 2026, adds the account rules, among them no commingling of a client’s money with the broker’s own; the older 18VAC135-20-180 is repealed. If the licensee holds the deposit in an interest-bearing account, the lease must disclose to the parties how the interest is paid out. These rules bind licensees, not a landlord who manages the rental without one. (Va. Code § 54.1-2108.1(B)(2); 18VAC135-20-181)

What happens to the security deposit when a Virginia rental property is sold?

The current owner must transfer the security deposits it holds to the new owner at the time of the transfer. Where a managing agent holds them under a written property management agreement, the owner asks the agent in writing, before settlement, to pay them over, and the agent then tells each tenant in writing that the deposit has been transferred to the new owner. Whoever holds the landlord’s interest when the tenancy ends must return any deposit that is owed to the tenant, whether or not it was handed over and whatever the seller and buyer agreed between themselves. Neither section says the seller is released. (Va. Code §§ 55.1-1213, 55.1-1226(E))

Does Alexandria, Virginia require interest on security deposits?

Not that we found. The Alexandria city charter gives the city power to pass an ordinance requiring interest of four percent a year on deposits of $100 or more held more than a year, but we found nothing in Alexandria’s code that enacts it, and the Act says it supersedes all other local ordinances or regulations on landlord and tenant relations and the leasing of residential property. The charter is a special act of the General Assembly, not an ordinance, and whether its power survives the Act is a question for a lawyer. (Charter of the City of Alexandria § 2.04:1; Va. Code § 55.1-1201(E))

Sources

About this page

Every quoted passage above comes from the same rules the Virginia tool runs on, and the 2014 clause is quoted from the chaptered act, because it never reached the Code. The statutes are on an automated weekly watch. Where a sentence gives our reading rather than the text, it says so. How we verify the law explains the process. This is general information that cites the law, not legal advice, and Orygn LLC is not a law firm. For advice about your situation, talk to a licensed Virginia attorney.