A Security Deposit Return Letter is a letter sent by a landlord to a tenant indicating how much of the original security deposit is being returned at the end of the tenancy, as well as itemized information for any deductions made.
Note: Some states require a landlord to provide this letter before withholding any of the tenant’s security deposit.
Why Write a Security Deposit Return Letter?
At the beginning of a lease, tenants are typically required to provide a refundable security deposit. The security deposit is commonly provided to secure payment for potential damages the landlord might incur during a tenant’s lease.
When a lease agreement expires, the landlord must finalize several items to comply with the terms of the agreement. One important task is returning a tenant’s security deposit. However, unpaid bills, past due rent, or the condition of the property may result in the landlord being entitled to keep a portion of the security deposit. Here are some specific reasons to write a security deposit return letter when returning this deposit to a tenant:
- Documentation – Providing a letter when returning a security deposit provides written documentation that the landlord returned a tenant’s security deposit. If a former tenant later claims that they never received their security deposit, this letter can come in handy for a landlord to dispute the tenant’s claim.
- Itemize Deductions – If a landlord is going to withhold any portion of the security deposit, it is important (and sometimes required by state law) to provide the tenant with an itemized list of those deductions. This will help the tenant understand why they are not receiving their full deposit. It also serves as supporting documentation if there is a legal dispute over the amount of security deposit that was withheld.
- Legal Requirement – In some states, it’s illegal to withhold any portion of a tenant’s security deposit without providing a detailed explanation.
What to Include in a Security Deposit Return Letter
A Security Deposit Return Letter will provide details on the return of a tenant’s security deposit and should include the following:
- Tenant’s name and current address
- A friendly greeting to the tenant
- The Lease End Date – The landlord should check the first box if the lease ended on the date provided in the lease agreement. The landlord should check the second box for leases terminated early, for whatever reason
- An introduction to inform the tenant of the purpose of the letter
- The date the tenant provided their security deposit
- The security deposit amount (include any accrued interest if state law requires the landlord to maintain the security deposit in an interest-bearing account for the benefit of the tenant)
- The date the lease agreement was signed
- The rental property address
- Briefly describe the actions taken to determine the amount of the security deposit to return to the tenant
- Itemized Deductions – The letter should itemize all deductions that the landlord is taking from the security deposit. Those can include things such as past due rent, late fees, and damage to various parts of the rental property
- Amount Due to Owner – This is the total amount that the landlord is deducting from the security deposit.
- Tenant Balance – This is the remaining amount of the security deposit that will be returned to the tenant.
- A closing paragraph that indicates what additional information is included with the letter such as supporting documentation for any deductions and payment for the balance of the security deposit
- Landlord’s contact information
- Landlord’s name and signature
It is helpful to include any documentation that will support the content of this letter. For example, you can provide a copy of the inspection that was performed, pictures that highlight any damages, invoices for repairs, or proof of unpaid rent and fees by providing a copy of the landlord’s rent ledger.
When to Send this Letter and Return a Security Deposit
While many states do not have a specific requirement for when this letter must be sent, almost all states have a specific requirement for when a security deposit must be returned after a lease agreement has ended or been terminated. See the chart below for every state’s requirements for returning a tenant’s security deposit.
|Time to Return Security Deposit
|14 days with proper notice, 30 days without proper notice, or if the landlord is deducting any amount from the security deposit
|1 month, unless a longer period is provided in the lease agreement (no more than 60 days)
|30 days, or within 15 days of receiving the tenant’s forwarding address (whichever is later)
|15-60 days (depending on whether the tenant disputes any deductions)
|30-45 days (depending on whether the tenant disputes any deductions or if the landlord provided any statements or receipts)
|30-60 days (depending on whether the tenant disputes any deductions)
|30 days for a written agreement and 21 days for a tenancy at will
|10 days (30 days if there are deductions)
|14 days (45 days for an itemized accounting if requested by the tenant)
|60 days, or within 45 days of the occupancy of a new tenant (whichever is shorter). The deadline can be extended by 15 days if damage exceeds the amount of the security deposit and the landlord has to hire a contractor to fix it
|30 days (an additional 30 days are allowed if there are deductions due to damage)
This letter should be sent simultaneously with the return of a tenant’s security deposit. Deliver it in a way that requires signature confirmation when received, such as certified mail. Even better if a landlord sends it by restricted certified mail which requires the tenant to be the only person that can sign for the letter.
The letter should be sent to the tenant’s forwarding address. If none was provided, it is advised to send it to their last known address and via email to ensure receipt. A copy of this letter should be filed with a notation of the means used to deliver the letter and any other relevant information.
Reasons for Deducting from a Security Deposit
There are several reasons a landlord can deduct from a tenant’s security deposit. Most lease agreements will provide those specific reasons. When a lease term ends, it’s important to conduct a final inspection and make sure all required payments have been made. Reasons a landlord can deduct from a security deposit typically include:
- Unpaid rent
- Property fees
- Late fees
- Unpaid utilities
- Cost of repairs beyond normal wear and tear
- Cleaning costs – This should not be used for general house cleaning. A tenant is only obligated to return the property in the same condition as when the tenancy began. Cleaning costs may only be deducted from a security deposit if the rental property needs excessive cleaning (e.g. pet stains).
- Early termination fee
- Any costs associated with the breach of a lease, including if a tenant unlawfully terminates a lease before it expires
- Brokerage fee
- Restore, replace or return personal property
It’s important to note that, while landlords may deduct from the security deposit to return the property to its original condition, they cannot charge the tenant for repairs they originally authorized.