Seattle, Washington: security deposit interest

Seattle Municipal Code chapter 7.24, the city's rental agreement regulation, contains no duty to pay or credit interest on a deposit the landlord holds, no holding-period trigger such as "held over one year," and no rate tied to any price index. Its one deposit-adjacent interest rule runs the other way: a landlord may not charge a tenant interest because the tenant elects to pay move-in costs or last month's rent in installments. What governs a Seattle deposit is Washington's RCW 59.18.270, which requires the money to sit in a trust account and gives the landlord the interest paid on that account unless landlord and tenant agree otherwise in writing.

Seattle deposit interest at a glance

How this interacts with state law

Washington's deposit statute is the layer that actually governs a Seattle deposit. RCW 59.18.270 requires the landlord to deposit the money promptly in a trust account maintained for tenants' deposits at a Washington financial institution or licensed escrow agent, and then provides that "unless otherwise agreed in writing, the landlord shall be entitled to receipt of interest paid on such trust account deposits." That is a default the parties can write around in the lease, not a bar on the tenant ever receiving interest. Nothing in state law stops a Washington city from adding its own interest rule; Seattle has not added one.

Notes and caveats

• Where the price-index claim comes from — Hemlane's Washington security-deposit page states it word for word: "In Seattle, landlords must pay interest on security deposits held over one year. The interest rate is set annually based on the Consumer Price Index." Both halves are wrong. Chapter 7.24 has no interest duty of any kind on a held deposit, no one-year trigger, and no price-indexed rate; the only interest rate anywhere in the chapter is a remedy measured by Washington's statutory judgment rate. The same page adds that Seattle landlords cannot charge last month's rent on top of a full deposit, which is also wrong — SMC 7.24.036 assumes last month's rent is charged and regulates the tenant's right to pay it in installments, while the one-month cap in SMC 7.24.035 covers the deposit plus non-refundable move-in fees.
• Seattle's interest rule points the other way — The city's rules on this subject protect tenants from paying interest, not landlords from keeping it. SMC 7.24.035 provides that landlords "may not impose any fee, charge any interest, or otherwise impose a cost on a tenant because a tenant elects to pay in installments," and SMC 7.24.036(C) says the same for last month's rent. The city's own guidance repeats it plainly: "You can't charge a tenant interest or refuse to rent to a tenant who opts to pay in installments." A reader who sees Seattle, security deposit and interest in one sentence without reading which way the duty runs will invert this into a payment requirement.
• The twelve percent figure in the code is a remedy, not a return — Ordinance 127497 (Council Bill 121254), which the city's record shows passed on August 18, 2026, adds a damages measure to chapter 7.24: a landlord who charges a prohibited fee, or unlawfully charges or withholds a security deposit, owes the tenant reimbursement plus interest, and "interest shall accrue from the date the prohibited fee was imposed at 12 percent per annum, or the maximum rate permitted under RCW 19.52.020." That is compensation for money taken unlawfully, running from the date of the unlawful charge and owed only where the landlord broke the law. It is not a return on a lawfully held deposit, and there is no holding period or rate schedule attached to it. The city's record of the ordinance does not state the date the change begins to operate.
• The clerk's public code pages are years out of date — The city clerk's legacy code pages still serve a chapter 7.24 section list from before 2016: it lacks 7.24.035 and 7.24.036, both added in 2016, and still lists 7.24.090, repealed in 2020. A Seattle citation built from those pages will be roughly a decade stale. The codified chapter and the enacted ordinances themselves are the sources to use.
• What Seattle does regulate about deposits — The city's real deposit rules are about size, installments and return. A security deposit plus non-refundable move-in fees may not exceed one month's rent, with non-refundable fees limited to cleaning and screening and capped at ten percent of a month's rent, and a pet deposit of up to twenty-five percent of a month's rent allowed on top. Tenants may pay move-in costs and last month's rent in installments on a schedule keyed to the length of the tenancy. The deposit must come back within thirty days, and a landlord who has no move-in checklist signed by both parties must return all of it.

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

Citations

• Seattle Muni. Code ch. 7.24 (Rental Agreement Regulation) (verified 2026) Official source
• Seattle Ordinance 125222 (2016) — adding SMC 7.24.035 and 7.24.036 · §§ 7.24.035, 7.24.036(C) (verified 2026) Official source
• Seattle Dept. of Construction and Inspections, Move-In Charges (verified 2026) Official source
• Renting in Seattle, Return of Your Security Deposit (verified 2026) Official source
• RCW 59.18.270 (Moneys paid as deposit or security — Deposit by landlord in trust account) (verified 2026) Official source

How this record was verified: Every ordinance in the City of Seattle's own legislative record that amends, adds to or repeals a section of Seattle Municipal Code chapter 7.24 — sixteen enacted ordinances, from Ordinance 124882 in 2015 through Ordinance 127497 in 2026 — read in full as enacted text, with all fifteen occurrences of the word 'interest' across them enumerated in context; the Department of Construction and Inspections guidance on move-in costs, move-in fees and deposits, installment payments and deposit returns read in full, together with the sixty-page official Renters' Handbook; and RCW 59.18.270 read in full, with its history line, for the state layer.

This page records local law on deposit interest. The statewide position — Washington's rule is a default the parties can change in writing: interest on a security deposit goes to the landlord "unless otherwise agreed in writing." — lives on the Washington deposit-interest page with its own citations and verification date.