Q: We are selling a single-family home in the District of Columbia to the family that has rented it since January 1971. At settlement, we will be returning their security deposit to them. I understand that usually a landlord is required to return the security deposit, plus 5 percent per annum interest. Does the interest apply to a rental that commenced in January of 1971?

A: The security deposit law is not found in the usual place where other District laws are available. Most District laws can be found in a set of books entitled the District of Columbia Code. Most real estate laws can be found in Title 45 of the District of Columbia Code, under the heading "real property."

However, the security deposit law, passed by the City Council a few years ago, can only be found in the housing regulations of the District of Columbia. Perhaps one day they will get put into the right place.

These housing regulations--which have the full force and effect of law--are very important for both landlords and tenants, and everyone interested or involved with rental property in the District should obtain a copy. They deal with such items as maintenance and repair, cleanliness and sanitation, and also the density use of sleeping rooms and bathrooms.

The security deposit law is section 2908, and specifically states that for all security deposits after the effective date of the act--Feb. 20, 1976--a landlord must pay interest to a tenant on the security deposit at a simple rate of not less than 5 percent per annum.

Thus, the answer to your specific question is that you will have to pay interest on the security deposit, but only back to Feb. 20, 1976.

Incidentally, you indicated that you will be returning the security deposit to them. I suggest that the attorney or title company conducting the settlement give your purchasers a line item credit for the security deposit and interest, and debit your side of the settlement sheet. The net result will be the same, but this way you will not have to give the tenant cash at settlement. This amount will be reduced from your total sales proceeds.

It should also be pointed out that the 5 percent interest requirement is applicable only for a security deposit of any tenancy of 12 months or more. Thus, if you rent your house, condominium or cooperative unit for less than one year, you are not obligated to pay interest on the security deposit when it is returned to the tenant.

The law further provides that the owner shall tender payment to the tenant of the security deposit and interest within 45 days after the end of the tenancy.