Most landlords have security deposits to protect their property against damages or their claims by their tenants. However, in DC/MD/VA and FL, there are “garnishment” statutes that can permit a third-party creditor to seize the security deposits to satisfy a judgment by the creditor. For example, you are holding a security deposit – you don’t have the “magic language” that you need to protect it. You then get served with a garnishment notice attaching the security deposit by the creditor. If you don’t respond and either defend it or pay the attachment, you will get sued.

It is recommended that you include the following language in all your leases: 

Notwithstanding anything to the contrary contained in this Lease, the security deposit held by the landlord is deemed to be earned and owned by the landlord upon receipt and the tenant has no rights to it until and unless, at the expiration of the lease, the tenant has a right to all or any part of the security deposit.

For commercial leases, garnishment laws vary across jurisdictions:

• Washington DC: Deposits are protected unless garnishment is expressly allowed.
• Maryland: Deposits can be garnished unless lease language protects them.
• Virginia: Deposits are typically safeguarded and must transfer to new property owners.
• Florida: Deposits can be garnished without protective lease terms.

For residential leases, garnishment laws also vary:

• Washington DC: Deposits are generally protected from garnishment unless lease obligations are satisfied.
• Maryland: Deposits can be garnished unless lease terms explicitly protect them.
• Virginia: Deposits are safeguarded and must be handled in accordance with tenant obligations.
• Florida: Deposits are vulnerable to garnishment without protective lease language.

Security deposits are not always safe from garnishment, leaving landlords exposed to potential losses. To safeguard these funds, landlords must proactively include protective language in their lease agreements. Consult legal counsel to ensure your leases comply with applicable laws and effectively shield your interests. PLEASE CALL WEISS LLP FOR MORE INFORMATION.