The City of Seattle has implemented limits on the amount landlords can charge residential tenants at the time that they move into their new home. If you’re renting out a property in areas like Tacoma, Burien, Normandy Park, Des Moines, and Federal Way, these rules may not apply directly to you…yet. However, as you likely know as Seattle goes, our region and sometimes eventually the entire State goes, so learning about these restrictions and regulations may be a good idea. For rental properties within Seattle’s city limits, the total move-in charges, including the security deposit and all non-refundable move-in fees, cannot be more than the equivalent of the first month’s rent.

Fees Versus Deposits for Seattle Rental Property

When you’re renting out a home in Seattle, you may charge deposits, like the security deposit, and you may also charge fees, such as a pet fee. Deposits and fees are defined differently for purposes of local rental laws. Fees are non-refundable, while deposits are fully refundable. This nomenclature “deposit” vs. “fees” is important when preparing your leases and/or screening criteria. There is no such thing as a non-refundable deposit in Seattle. If a complaint were to be filed with the city amounts referred to as a non-refundable deposit could either be deemed a deposit and would need to be refunded back to the tenant when they move-out and/or could be deemed a “fee” which may lead to violations of the restrictions on move-in funds.  

This is important because the total of non-refundable fees (cleaning fees, pet fees, HOA new occupant/move-in fees, etc.) cannot exceed 10 percent of the first month’s rent.

There are also limitations on the amount what and how much non-refundable fees can be charged for. If you charge a cleaning fee before the lease begins and the actual cost of cleaning exceeds that amount you cannot charge a cleaning fee when the tenant is moving out. 

If you’re allowing pets in your property, you are limited to a pet deposit of only 25 percent of one month’s rent. This makes it vitally important to understand the costs of potential repairs and/or cleaning required after a tenant with animals has lived in the property (air duct vent cleaning, deodorization of carpets).  While this additional deposit is outside of and in addition to the security deposit and fees. These costs can quickly add up and 25% of the rent may not be adequate.

Paying Move-In Costs in Installments

Seattle allows tenants to pay their move-in costs in installments. As a landlord, you cannot charge additional fees or any interest if the tenant chooses to pay in installments. 

The way the installment plan breaks down depends on the rental term and your lease agreement. For rental terms of six months or more, the tenant has the option to pay in six equal monthly installments. For rental terms of one to six months, the tenant must pay in four equal installments. For month-to-month rental agreements, you have to allow your tenants to split the move-in fees and deposits into two equal payments. 

Holding Deposits in Seattle Rental Properties

Landlords can charge tenants a holding deposit for the length of the screening period and to ensure that the tenant will move in and execute the lease once they are approved for the property. If you’re going to require a holding deposit from a tenant, you’ll need a written agreement that clearly describes the terms of the deposit and the responsibility of each party. You cannot keep the holding deposit if your tenant is denied the property after a routine screening is conducted. 

If the tenant is approved, the holding deposit must be applied to the first month’s rent or the security deposit. 

The restrictions on move-in costs is only one of the challenges Seattle landlord’s face. Among other requirements the City of Seattle regulates what can be screened for (a landlord is prohibited from asking for criminal history in Seattle city limits), what income must be accepted for qualifying purposes, and has obligations for landlords to publish your screening criteria for all applications. Renting in Seattle can be a great and profitable experience; however, it is complex and many landlords are realizing hiring a professional is well worth the small costs to be assured all of the regulations are properly complied with.

Handling the Seattle leasing and management process on your own can become confusing, burdensome, and at times frustrating. We’re here to help. Contact our team at ACRES Property Management, and we’ll ensure your move-in funds are collected correctly and in compliance with Seattle law. We provide residential property management services to owners and investors in Seattle as well as Tacoma, Burien, Normandy Park, Des Moines, and Federal Way.