Burlington, Vermont: security deposit interest

There is no published Burlington rate and no annual payment: the interest simply rides with the deposit and is returned with it, within fourteen days after the tenant leaves, along with a written statement itemizing any deductions. A landlord may take deductions from the deposit plus its interest for damage, unpaid rent, unpaid utility charges and the cost of removing abandoned property, and everything left over, interest included, goes to the tenant. Miss the fourteen days and the landlord forfeits the right to withhold anything; where the city's housing board of review finds the failure willful, the landlord owes double the amount wrongfully withheld. The deposit itself is capped at one month's rent, plus a possible half-month pet payment that cannot be charged for an animal that mitigates a disability.

Burlington deposit interest at a glance

The rate

There is no published Burlington rate, and there never has been one. Section 18-120(a)(1) requires the deposit to be "held by the owner in an interest-bearing account, with an interest rate at least equivalent to a current Vermont bank passbook savings account" — a floating floor rather than a number. What the tenant is owed is what the account earns, and the account may not pay less than what a Vermont bank passbook savings account is paying at the time. Because the benchmark moves with the market and no city officer announces a figure, there is nothing to look up for a given year: the answer for a particular tenancy comes from the account the landlord actually opened, measured against the passbook floor. Note what the benchmark is not — it names a Vermont passbook rate as the standard, not a Vermont bank as the place the money must sit.

Accrual and payment

Burlington sets no separate interest clock. The interest belongs to the deposit and comes back with it: within fourteen days from the date the tenant vacates or abandons the unit — or from the date the landlord discovers that, whichever applies — the landlord must return the deposit with a written statement itemizing any deductions. The landlord may retain part of "the deposit plus interest" for damage beyond normal wear and tear attributable to the tenant, unpaid rent, unpaid utility or other charges the tenant owed directly, and the cost of removing abandoned property; whatever is left, including the interest, goes to the tenant. Where the housing board of review rules on a disputed deduction, the ordinance is explicit that the tenant receives all remaining deposit money and interest beyond the approved deductions.

Who and what is covered

The section governs deposits taken as a condition of renting, leasing or occupying a rental unit as a dwelling in Burlington, and it caps the deposit itself at one month's rent. An owner may take one additional payment of half a month's rent to allow pets, which may not be charged for an animal that mitigates a disability, and no other payment or deposit beyond the first month's rent may be required as a condition of renting.

Custody of the deposit

The deposit must be held in an interest-bearing account. That is the only custody rule: the ordinance names no institution, does not require a Vermont bank or credit union, and does not require a trust or escrow account or a separate account per tenant. The interest-bearing character of the account, and the passbook floor on what it pays, are the whole of the requirement.

Penalty for violation

Two consequences sit in § 18-120(c). A landlord who does not return the deposit with the itemized statement within fourteen days forfeits the right to withhold any part of it. If the housing board of review determines that the failure was willful, the landlord is liable for double the amount wrongfully withheld. A failure to give the tenant the required notice, or to obey a board order, is also a violation of the city's minimum housing ordinances and is punishable under § 18-31. Disputes go to the Burlington housing board of review: the tenant asks in writing, through the city clerk's office or the board's clerk, within thirty days of receiving notice of the right to a hearing, or within forty-four days of vacating where no such notice was given.

How this interacts with state law

Vermont's own security-deposit statute, 9 V.S.A. § 4461, requires no interest — but its subsection (g) expressly lets a town or municipality adopt a security-deposit ordinance supplemental to the state minimums and says in terms that such an ordinance "may authorize the payment of interest on a security deposit." Burlington is the Vermont city that used it, and its ordinance visibly tracks the grant: the fourteen-day return, the itemized statement, the forfeiture, the double damages for a willful failure and the housing board of review as the forum all mirror the state section. There is a tension in the same subsection that the city's ordinance does not resolve, and neither does this record: § 4461(g) also says an ordinance "may not limit how a security deposit is held," while § 18-120(a)(1) directs that the deposit "shall be held by the owner in an interest-bearing account." Whether requiring an interest-bearing account is a prohibited limitation on how the deposit is held, or simply the mechanics of the permission granted in the very next sentence, is an open question — no Vermont court decision, opinion of the Attorney General, or city position on it was located.

Work out a figure: the deposit interest calculator covers Burlington — no published rate table exists here, so it computes on the rate the account actually paid, per the local rule.

Notes and caveats

• Why there is no rate to look up — Burlington's rule sets a floor, not a figure: the account must pay at least what a current Vermont bank passbook savings account pays. Nobody at the city announces a number each year, and no table exists. In practice the interest owed is whatever the landlord's account earned, and a tenant who wants to check it asks the landlord which account held the money and what it paid, measured against ordinary Vermont passbook rates for the period.
• The five percent claim is false — Summaries circulate saying Burlington landlords must pay five percent a year on deposits held over a year. Neither half of that is in the ordinance. Section 18-120 states a floating passbook floor, not a percentage, and it has no holding-period threshold at all — the account must bear interest from the start. The only percentage anywhere in the article containing the deposit rule belongs to an energy-efficiency program and has nothing to do with deposits.
• No Vermont bank requirement — A second claim in circulation is that the deposit must sit in a Vermont bank, credit union or savings and loan association. The ordinance says no such thing: Vermont appears only as the yardstick for the rate. The words "credit union" and "savings and loan" do not appear in the article at all, and the word "passbook" appears exactly once — in the rate benchmark.
• One month, and one pet payment — The deposit may not exceed one month's rent for the unit, and beyond the first month's rent no other payment or deposit may be required as a condition of renting. The single addition the ordinance allows is a payment equal to half a month's rent for permission to keep pets, and even that may not be charged for an animal that mitigates a disability. The occasionally repeated "two months if furnished" rule is not Burlington's.
• An unresolved tension in the state authorization — The Vermont statute that lets a municipality regulate deposits, 9 V.S.A. § 4461(g), contains two sentences that pull against each other here: an ordinance "may not limit how a security deposit is held," and an ordinance "may authorize the payment of interest on a security deposit." Burlington's rule requires an interest-bearing account, which is either a limitation on how the deposit is held or the necessary mechanics of authorizing interest. No Vermont court decision or city position resolving it was located. What is set out here is the ordinance as enacted, which the city has amended as recently as December 2014 — well after the state subsection's last amendment in 2007.
• Where a deposit dispute goes — Burlington runs deposit disputes through its housing board of review rather than straight to court. A tenant who objects to a deduction asks in writing, at the city clerk's office or directly with the board's clerk, within thirty days of receiving the landlord's statement and its notice of the right to a hearing, or within forty-four days of moving out where no notice came. The board takes evidence, may visit the unit, and decides how much of the withheld money the landlord keeps; either side may ask for a hearing on other deposit questions the section covers.

Cite this page: "Landlord Atlas, Burlington, Vermont: security deposit interest (verified August 28, 2026), landlordatlas.com/laws/deposit-interest/vermont/burlington/" — free to cite and quote with a link (how these records are verified).

Citations

• Burlington Code of Ordinances § 18-120 (Deposits; interest-bearing account and the passbook floor) · (a)(1) (verified 2026) Official source
• Burlington Code of Ordinances § 18-120 (return of the deposit with interest; forfeiture and double damages) · (c) (verified 2026) Official source
• 9 V.S.A. § 4461 (security deposits; municipal ordinance authorization) · (g) (verified 2026) Official source

How this record was verified: Complete read of Burlington Code of Ordinances § 18-120 (Deposits), subsections (a) through (g) with its ordinance history line, in chapter 18 (Housing), article III, on the city's official code site, current through Ordinance 7-15-26 passed July 15, 2026; all eight files of chapter 18 examined for every occurrence of the word 'interest' with each occurrence placed in context, and article III separately examined for any percentage figure, any named institution requirement and any second deposit cap; the city charter examined for any security-deposit or deposit-interest provision; and 9 V.S.A. § 4461 read in full on the Vermont General Assembly's site for the municipal authorization in subsection (g) and its amendment history.

This page records local law on deposit interest. The statewide position — Vermont law does not require a landlord to pay interest on a security deposit — but it expressly lets a town require it, and Burlington does. — lives on the Vermont deposit-interest page with its own citations and verification date.