Overview
Vermont's security deposit laws are governed by the Residential Rental Agreements Act (Vt. Stat. tit. 9, § 4451 et seq.). While Vermont does not set a specific statutory cap on deposit amounts, the law requires deposits to be reasonable and establishes one of the shortest return timelines in the country at just 14 days. Vermont also requires landlords to hold deposits in a separate escrow account.
This guide covers everything landlords and tenants need to know about security deposits in Vermont.
Deposit Limits
Vermont has no specific statutory limit on security deposit amounts. However, case law and general legal principles require that the amount be reasonable. In practice, most landlords charge one to two months' rent.
A deposit that is significantly higher than typical market rates may be challenged as unreasonable. Landlords must hold the security deposit in a separate escrow account at a Vermont financial institution and must inform the tenant of the account's location.
cite: Vt. Stat. tit. 9, § 4461
Allowable Deductions
Landlords may deduct from the security deposit for the following reasons:
- Unpaid rent: Any rent owed at the time of move-out
- Damage beyond normal wear and tear: Costs to repair damage caused by the tenant that exceeds ordinary use
- Cleaning costs: Charges to restore the unit to the same condition as at move-in
- Other lease obligations: Unpaid utility charges or other costs the tenant agreed to pay under the lease
What Constitutes Normal Wear and Tear?
Normal wear and tear includes:
- Minor scuffs or marks on walls from daily living
- Small nail holes from hanging pictures and decorations
- Carpet wear from regular foot traffic
- Gradual fading of paint or finishes due to sunlight
Damage beyond normal wear and tear includes:
- Large holes in walls, doors, or ceilings
- Stains, burns, or tears in carpet or flooring
- Broken windows, fixtures, or appliances
- Pet damage to any surfaces or features
- Excessive grime or filth requiring deep cleaning
Return Timeline
Vermont has one of the shortest deposit return timelines in the nation. Landlords must return the security deposit within 14 days of the tenant vacating the unit. The return must include:
- The remaining deposit amount (if any deductions were made)
- An itemized written statement listing each deduction and the amount charged
The landlord must send the refund and statement to the tenant's last known address or forwarding address. If the tenant owes more than the deposit amount, the landlord must still provide an itemized statement within 14 days.
If the landlord fails to return the deposit or provide the itemized statement within 14 days, the tenant may bring a legal action to recover the deposit. The court may award actual damages, plus punitive damages if the landlord acted in bad faith.
cite: Vt. Stat. tit. 9, § 4461
Dispute Resolution
If a tenant believes their deposit was wrongfully withheld, they can take the following steps:
- Send a written demand letter to the landlord requesting the return of the deposit
- File a claim in Small Claims Court for amounts up to $5,000
- Contact the Vermont Attorney General's Consumer Assistance Program for mediation assistance
- Seek punitive damages: If the landlord acted in bad faith, the court may award additional damages beyond the deposit amount
Landlords bear the burden of proving that deductions were reasonable and necessary. Tenants should thoroughly document the condition of the rental unit at both move-in and move-out with dated photographs, videos, and a written condition checklist.
Vermont's short 14-day return window means tenants should act promptly if the deadline passes without receiving their deposit.