What is required regarding interest on security deposits?

The requirement regarding interest on security deposits reflects the legal obligations landlords have towards their tenants in relation to the handling of security deposits. In many jurisdictions, including Washington D.C., landlords are required to pay interest on tenants' security deposits when they meet certain criteria. This requirement is designed to protect tenants' funds and ensure fairness in the management of their money.

The correct answer emphasizes that interest must be paid on security deposits for tenancies of one year or more. This stipulation helps create a financial incentive for landlords to hold tenants' deposits responsibly and ensures that tenants are compensated for the time their money is held, as it could have otherwise been invested or utilized productively.

By focusing on this timeframe, the regulation acknowledges that long-term tenancies may result in landlords holding substantial amounts of their tenants' funds for extended periods. As a means of fairness and transparency, landlords must provide interest for deposits held for one year or longer, thus fostering a balanced rental relationship and protecting tenants' financial interests.