Washington Nonrefundable Fees vs. Refundable Deposits — RCW 59.18.285 Compliance Guide (2026)

What Changed in Washington Deposit and Fee Law

Historically, Washington landlords operated under broad discretion to collect upfront fees and deposits with minimal disclosure requirements. That changed systematically between 2010 and 2024. RCW 59.18.285, enacted as part of the 2010 landlord-tenant law overhaul, established a clear statutory framework: refundable deposits and nonrefundable fees must be distinguished in writing, and the distinction must be transparent and explicit.

In 2024, the Washington Attorney General’s office issued enforcement guidance following a series of class-action settlements with large property management companies, including a $2.8 million settlement for improper fee disclosure practices. While these cases involved larger portfolios, the statute applies equally to self-managing landlords with 2–75 units. The AG’s office has indicated that smaller landlords will face the same scrutiny if complaints are filed, particularly in high-complaint jurisdictions like King County, Pierce County, and Clark County.

The core legal principle remains: if a fee is not explicitly labeled nonrefundable in a written agreement signed before move-in, it is presumed refundable. This presumption is powerful. It means the burden shifts to the landlord to prove compliance, not the tenant to prove a violation.

RCW 59.18.285: What the Statute Actually Requires

The statute is short but dense. Here is what it mandates:

RCW 59.18.285: “Any moneys paid by a tenant to a landlord or landlord’s agent as a nonrefundable fee shall be designated as such in writing in the rental agreement or other written agreement between the landlord and tenant signed by the parties before the tenancy begins. The written designation shall be clear and conspicuous.”

Break down the statutory language:

Statutory Element	What It Requires	Common Failure Mode
“Designated as such in writing”	Must appear in written lease or addendum; verbal statements do not satisfy the requirement	Landlord says fee is nonrefundable during lease negotiation but lease document says only “move-in fee”
“In the rental agreement or other written agreement”	Can be in the main lease or a separate addendum, but must be signed by both parties before tenancy begins	Fee disclosed in lease amendment after tenant has already moved in or begun occupying
“Signed by the parties before the tenancy begins”	Both landlord and tenant must have signed; tenancy means the tenant has the right to occupy the unit (even if move-in hasn’t occurred)	Lease signed, tenant has occupancy rights, then landlord unilaterally adds nonrefundable fee via email or addendum
“Clear and conspicuous”	Must be easily noticeable; courts interpret this as requiring distinct formatting, bold/capital text, or separate section heading	Fee buried in dense paragraph; same font/formatting as other lease terms; not separated from refundable fees

Refundable Deposits vs. Nonrefundable Fees — Statutory Definitions

Washington law does not provide exhaustive definitions of what qualifies as a deposit vs. a fee. Instead, courts apply a functional test: if the money is intended to secure the tenant’s performance of the lease (payment of rent, property damage, lease violations), it is a deposit. If it is payment for a service, right, or privilege, it is a fee.

The distinction matters enormously because deposits are governed by RCW 59.18.020, which mandates trust account holding, interest accrual in some cases, and strict accounting at lease end. Nonrefundable fees go directly to the landlord’s operating account and are not subject to those requirements.

Common Deposits (Refundable Unless Explicitly Designated Nonrefundable)

• Security deposit — money held to cover unpaid rent, utilities, or damage beyond normal wear and tear
• Damage deposit — deposit specifically tied to potential property damage liability
• Pet deposit — money held to cover pet-related damage (Washington allows pet deposits, but some cities cap them separately; see below)
• Key deposit — money held to ensure return of keys and lock mechanisms

These are presumed refundable unless the written agreement explicitly states otherwise. Even if a lease calls a charge a “non-refundable damage deposit,” Washington courts have held that the statutory language (“security deposit”) trumps lease language, making it refundable. The safer approach: if you want nonrefundable pet fees, call them “pet fees” or “pet rent,” not “pet deposits.”

Common Nonrefundable Fees (Must Be Clearly Labeled)

• Administrative/application fees — cost of running credit check, background check, reference verification (must be reasonable and disclosed before application; RCW 59.18.257 caps total fees)
• Pet fees or pet rent — monthly fee for pet occupancy or one-time nonrefundable pet fee (provided it is not called a “deposit”)
• Lease violation fees or late fees — fees for specific lease breaches or late rent (subject to reasonableness limits and timing requirements)
• Cleaning or turnover fees — designated upfront as nonrefundable payment for landlord’s costs if tenant leaves unit in non-normal condition (distinct from normal move-out cleaning deducted from security deposit)
• Utility setup or service fees — one-time fee for utility transfers, appliance setup, or trash removal (not damage-related)

The “Clear and Conspicuous” Standard: What Courts Actually Expect

The statutory language “clear and conspicuous” has been interpreted in Washington case law and AG enforcement guidance. Here are the standards:

What Passes the “Clear and Conspicuous” Test

• Separate section with heading: “NONREFUNDABLE FEES” in bold capitals, followed by itemized list with dollar amounts
• Distinct formatting: Nonrefundable fees in a different color, larger font, or contrasting background from refundable deposits section
• Explicit language: “The following fees are NONREFUNDABLE and will not be returned to the tenant under any circumstances: [fee name] — $[amount]”
• Placement: Prominent location in lease (front page, first page of fees section, or highlighted in table of contents)
• Separate refundable/nonrefundable schedule: Two-column table clearly showing which fees are refundable and which are not, signed by both parties

What Fails the “Clear and Conspicuous” Test

• Fee mentioned in running text without formatting distinction (e.g., “The pet fee of $200 is nonrefundable” buried in a paragraph about pets)
• Generic phrase like “nonrefundable fee” without itemizing which specific fees are nonrefundable
• Fee labeled “nonrefundable” in the lease but disclosed verbally or via email after signing
• Assumption that tenants know what “industry standard” fees are nonrefundable (Washington rejects this; explicit disclosure is mandatory)
• Fine print or footnote language that requires reading multiple pages to understand which fees are nonrefundable
• Lease that lists a single refundable “move-in fee” but then withholds portions as nonrefundable at move-out (this violates the statute; designation must occur before tenancy begins)

Trust Account Requirements for Refundable Deposits

If you have not designated a fee as nonrefundable in writing, it is a refundable deposit, and RCW 59.18.020 kicks in. This section mandates:

Requirement	Rule	Penalty for Violation
Trust Account Holding	Deposits must be held in interest-bearing account (or account that earns less than 5% if no such account exists) in Washington bank or credit union; funds cannot be commingled with landlord’s operating account	Treble damages (3x deposit amount) plus court costs and attorney fees; RCW 59.18.020(4)
Written Receipt	Landlord must provide written receipt within 21 days of receiving deposit; receipt must identify account location, account number (last 4 digits OK), and interest rate	Treble damages; tenant can recover attorney fees even if amount is small
Interest Calculation	Landlord must pay tenant accrued interest when deposit is returned (or make reasonable effort to pay if interest accrued at less than $1/month); interest is calculated from date of receipt	Treble damages if withheld intentionally; courts may also award interest on the treble damages award
Return Within 30 Days	Full deposit plus interest must be returned within 30 days of lease end, or landlord must provide itemized deduction statement with supporting documentation (receipts, photos, estimates)	Treble damages for deposits wrongfully withheld; RCW 59.18.020(2) presumes violation if no statement provided

Critical point: If you have not explicitly designated a fee as nonrefundable in writing, you cannot hold it as a nonrefundable fee at move-out, even if you believe it was understood. The statute is clear: designation must occur before tenancy begins. If you want to avoid the trust account requirements for a particular charge, you must label it nonrefundable upfront.

Seattle, Tacoma, and Local Fee Caps

Washington state law allows but does not require local jurisdictions to cap nonrefundable fees. Several major cities have done so:

Seattle (City Ordinance 125322, effective 2020)

• Nonrefundable fees capped at one month’s rent (combined total for all nonrefundable fees)
• Security deposit capped at one month’s rent (refundable; separate from nonrefundable fee cap)
• Pet fees: Up to $500 nonrefundable pet fee plus up to $25/month pet rent are allowed; cannot be counted against the one-month nonrefundable fee cap if clearly separated
• What counts as a nonrefundable fee: Application fees (up to $50 unless documented higher actual cost), move-in/administrative fees, but NOT pet fees if labeled and charged separately
• Enforcement: Seattle Office of Civil Rights handles complaints; penalties include restitution, penalties up to $1,000 per violation, and attorney fees

Tacoma (City Ordinance 27.18, effective 2024)

• Nonrefundable fees capped at 75% of one month’s rent (more restrictive than Seattle)
• Security deposit capped at one month’s rent (refundable)
• Pet fees: Up to $300 one-time nonrefundable fee plus $15–25/month pet rent
• Application fees: Capped at actual documented cost, not to exceed $30 for a single application
• Enforcement: Tacoma Housing & Community Development; penalties up to $500 per violation, restitution of excess fees

Other Jurisdictions with Fee Caps

• Spokane: Working toward fee cap ordinance (as of mid-2026; check local code before leasing)
• Olympia: One-month nonrefundable fee cap proposed (not yet enacted as of July 2026)

Action item: If you manage units in Seattle, Tacoma, or any incorporated city, research that city’s tenant protection ordinance or contact the city’s housing office. Fee caps are often buried in municipal code sections 20.86, 27.18, or similar chapters. A single violation in Seattle can expose you to penalties of $1,000+ per tenant, plus restitution of excess fees for all affected tenants.

Practical Compliance Checklist: Lease Language and Documentation

Here is a step-by-step approach to ensuring RCW 59.18.285 compliance:

Step 1: Itemize All Move-In Charges

Before drafting the lease, list every charge you will collect upfront:

• First month’s rent
• Security deposit (refundable)
• Pet deposit or pet fee (specify refundable or nonrefundable)
• Cleaning fee, if charged (refundable or nonrefundable?)
• Application fee (typically nonrefundable, but must be pre-approved and capped at actual cost)
• Administrative/move-in fee (if charging, must be designated nonrefundable or refundable)
• Any other charges (key fee, utility setup, etc.)

Step 2: Create a “Fees and Deposits” Section in the Lease

Use this template or similar language:

SECTION X: NONREFUNDABLE FEES AND REFUNDABLE DEPOSITS

Tenant agrees to pay the following to Landlord before move-in:

REFUNDABLE DEPOSITS (will be held in trust and returned per RCW 59.18.020):
— Security Deposit: $[X] (to cover unpaid rent, utilities, damage beyond normal wear and tear)
— Pet Deposit: $[X] (to cover pet-related damage; refundable if no damage)

NONREFUNDABLE FEES (will NOT be returned under any circumstances):
— Pet Fee (monthly pet rent or one-time): $[X]/[month or once]
— Administrative/Move-In Fee: $[X]
— Cleaning Fee (if unit returned in non-normal condition per move-out inspection): $[X]

Tenant acknowledges receipt of this section and understands which charges are refundable and which are nonrefundable.

Step 3: Ensure Formatting Is “Clear and Conspicuous”

• Use bold or ALL CAPS for section heading and “NONREFUNDABLE FEES” label
• Use a different background color or text color for the nonrefundable section (e.g., light red background)
• Separate refundable and nonrefundable fees into distinct subsections (do not mix them in the same bullet list)
• Ensure this section appears on the first or second page of the lease, not in an appendix
• Use a larger font size or line spacing than surrounding text if possible

Step 4: Obtain Dual Signatures and Issue Receipt

• Have both landlord and tenant sign the lease page containing fees and deposits (not just the final signature page)
• Issue a written receipt within 21 days that lists all deposits, trust account details, and nonrefundable fees
• Keep a copy of the signed lease and receipt in your file for each tenant

Step 5: Refund Deposits Within 30 Days of Move-Out

• If returning full deposit plus interest, send check or transfer with a cover letter stating “Refund of Security Deposit and Accrued Interest”
• If deducting for damage or unpaid rent, issue an itemized statement with supporting documentation (photos, repair estimates, receipts, rent ledger)
• Nonrefundable fees should not appear on the move-out accounting; they were collected and retained at move-in

What Happens if You Get It Wrong: Penalties and Enforcement

Statutory Damages

If a tenant challenges improper fee designation, RCW 59.18.020(4) provides:

Violation	Damages	Example
Fee collected but not designated nonrefundable in writing	Treble damages (3x the deposit amount) + actual damages + attorney fees + court costs	Tenant paid $1,500 security deposit. Landlord withholds $300 for cleaning, claiming it was “understood” to be nonrefundable. Tenant sues. Landlord owes $4,500 (3x $1,500) + attorney fees, even though deposit was only $1,500.
Nonrefundable fee not held in trust account (i.e., commingled with operating account)	Treble damages (if deposit treated as nonrefundable fee to avoid trust account requirement)	Landlord labels $1,500 as “nonrefundable move-in fee” to avoid trust account requirement, but withholding proves it was actually a deposit. Treble damages apply.
No written receipt issued within 21 days	Treble damages; presumption that deposit was not held properly	Landlord collects $1,500 security deposit but never issues receipt. Tenant can sue for $4,500 treble damages + attorney fees.
Deposit not returned within 30 days without itemized statement	Treble damages; presumption of wrongful withholding	Landlord holds $1,500 deposit for 60 days without accounting. Treble damages = $4,500 + attorney fees.

Enforcement Agencies

Washington Attorney General’s Office: Handles statewide complaints; can investigate and sue for civil penalties and consumer restitution on behalf of all affected tenants. 2024 enforcement included:

• $2.8 million settlement with Gramercy Property Management for improper fee disclosure
• $1.2 million settlement with Preferred Property Management for security deposit trust account violations

Local city attorneys and housing offices: Seattle Office of Civil Rights, Tacoma Housing & Community Development, and similar offices in other cities handle complaints under local ordinances and coordinate with AG on state law violations.

Small claims court: Tenants can sue individually for treble damages without attorney representation; courts are experienced in these cases and tend to rule strictly in tenant’s favor if documentation is incomplete.

Practical Risk Assessment

If you manage 2–75 units, even one complaint can expose you to significant liability:

• Single-unit violation: Treble damages ($4,500–8,000 for typical security deposits) + attorney fees (typically $2,000–5,000 in small claims)
• Multi-tenant exposure: If your violation affects 10 tenants (e.g., systematic failure to issue receipts), AG can bring class-action recovery totaling $45,000–80,000 + penalties
• Reputation damage: Complaints filed with AG or city housing office are public record; prospective tenants and tenant advocacy groups may research your compliance history

Common Mistakes and How to Avoid Them

Mistake 1: Mixing Refundable and Nonrefundable Charges in One Line

Wrong: “Move-in Fee (partially nonrefundable): $1,500”
Right: Separate the charges:
– “Security Deposit (Refundable): $1,200”
– “Move-In Administrative Fee (Nonrefundable): $300”

Mistake 2: Charging a “Cleaning Deposit” Then Withholding It as Nonrefundable at Move-Out

Wrong: Lease says “Cleaning Deposit: $200,” tenant moves in, then landlord deducts $200 at move-out claiming it was “understood” as nonrefundable.
Right: If you want to charge a nonrefundable cleaning fee, label it explicitly: “Nonrefundable Cleaning Fee (for professional turnover cleaning): $200” before lease signing.

Mistake 3: Verbal Disclosure of Nonrefundable Fees

Wrong: Lease does not mention the nonrefundable pet fee, but landlord says “that’s $250/month nonrefundable” during the lease signing meeting.
Right: Every nonrefundable fee must appear in the written lease signed by both parties. Verbal statements do not satisfy RCW 59.18.285.

Mistake 4: Failing to Distinguish From Pet Deposits in Pet-Friendly Units

Wrong: “Pet Fee: $500” without clarifying refundable or nonrefundable.
Right: “Nonrefundable Pet Fee (monthly or one-time): $[X]” or “Pet Deposit (Refundable, held to cover pet damage): $[X]”
Note: In some jurisdictions, you cannot charge both a pet deposit AND a monthly pet fee; check local rules in Seattle, Tacoma, etc.

Mistake 5: Not Issuing a Receipt Within 21 Days

Wrong: Collect deposit, don’t send receipt for 30+ days or at all.
Right: Within 21 days of receiving any refundable deposit, send a written receipt (email is acceptable) identifying the account bank, account type, and interest rate. Keep a copy in your file.

Mistake 6: Depositing All Move-In Money Into the Same Account (Operating vs. Trust)

Wrong: Deposit security deposits and nonrefundable fees into the same operating account.
Right: Refundable deposits → separate interest-bearing trust account. Nonrefundable fees → operating account. Never commingle.

How to Document Compliance (Ongoing Records)

Create a file for each tenant that contains:

1. Signed lease agreement (both pages if signature page is separate; ensure fees/deposits section is signed)
2. Written receipt issued within 21 days, listing all deposits, account details, and nonrefundable fees
3. Copy of bank statement or letter from bank confirming account type (interest-bearing) and account details for verification
4. Email confirmation or tenant acknowledgment that receipt was delivered (optional but helpful)
5. Move-out checklist and photos (for damage assessment, separate from fee refund decision)
6. Itemized deduction statement (if deducting from deposit), with supporting receipts, estimates, or invoices for repairs/cleaning
7. Final payment record showing date and amount of deposit return or final deduction

Keep these records for at least 3 years after lease end. In case of a dispute, you will need to show the tenant designations were made in writing, signed, and delivered before occupancy began.

Using LeaseBase for Compliance Documentation

Managing deposits and fees manually creates risk: missing receipts, lost documentation, or inconsistent lease language across multiple units. LeaseBase’s compliance engine stores signed lease agreements with automated flagging for missing fee disclosures and generates required receipts within your jurisdiction’s deadline (21 days in Washington). The