WeVote
Log In

Bill

Bill

H 565

An act relating to security deposits

2025-2026 Regular Session Introduced by Theresa Wood

The bill caps security deposits at three months’ rent or lot rent and requires deposits to be held in interest-bearing accounts for tenants.

Read first time and referred to the Committee on General and Housing
0
WeVote Research Nonpartisan
Bill Summary · H 565

Overview

H.565 (Session 2025-2026, Vermont) proposes to reform security deposits for residential rental agreements and mobile home park leases. The core aims are to cap security deposits at three months’ rent or lot rent and to require deposits to be held in interest-bearing accounts for the benefit of tenants/leaseholders.

Main purpose and intent

  • Limit the amount a landlord or mobile home park owner may collect as a security deposit to no more than three months’ rent (residential) or three months’ lot rent (mobile home parks).
  • Require security deposits to be held in an interest-bearing account on behalf of the tenant/leaseholder, with interest not counted toward the deposit limit.
  • Allow local governments to adopt ordinances that supplement state protections, including potential interest payment and dispute resolution processes, while preserving minimum protections.

Key provisions and changes

Residential rentals (9 V.S.A. § 4461, as amended)

  • Definition: Security deposit includes any refundable advance, deposit, or prepaid rent, plus any accrued interest.
  • Cap: Prohibits charging or receiving a security deposit exceeding three months’ rent.
  • Deposit holding: Landlords must maintain the security deposit in an interest-bearing account for the tenant; interest earned does not count toward the cap.
  • Local authority: Towns/municipalities may adopt ordinances enhancing security deposit protections (supplemental to state law). Ordinances may address holding methods, allow interest payment, and provide a housing board of review for disputes.

Mobile homes and mobile home parks (10 V.S.A. § 6244, as amended)

  • Definition: Security deposit includes any refundable advance, deposit, or prepaid rent for mobile home lots or park occupancy; interest accrual remains separate from the cap.
  • Cap: A park owner shall not charge or receive a security deposit exceeding three months’ lot rent.
  • Deposit holding: Must be placed in an interest-bearing account on behalf of the leaseholder; interest does not count toward the cap.
  • Local authority: Municipalities may adopt ordinances parallel to residential protections, including interest provisions and dispute resolution via a housing board of review.

Transition provisions

  • Grandfathering: If a lease was in effect before July 1, 2026, deposits may exceed the three-month cap until the existing lease ends or is renewed.
  • Deposit timing: Any security deposits collected before July 1, 2026, must be deposited into an interest-bearing account within 30 days after July 1, 2026.

Who is affected

  • Landlords of residential rental properties in Vermont.
  • Mobile home park owners and operators.
  • Tenants and mobile home leaseholders (and prospective tenants) who provide security deposits.
  • Local governments that may enact supplemental ordinances on security deposits.
  • Housing boards of review (where invoked by ordinance for dispute resolution).

Timelines and effective date

  • Effective date: July 1, 2026.
  • Transition/sunset: For leases in effect prior to July 1, 2026, deposits may exceed the cap until those leases end or are renewed.
  • Deposits collected before July 1, 2026: Must be placed in an interest-bearing account within 30 days after July 1, 2026.

Notes

  • The bill emphasizes protecting tenants’ and leaseholders’ security deposits through a capped amount and requiring prudent deposit handling (interest-bearing accounts).
  • It preserves local flexibility by allowing municipalities to enact supplementary ordinances consistent with the minimum protections.

Compiled from official sources — confirm details with the bill’s official record.

Sign in to ask a question.