Given that 41% of tenants expect their full security deposit back, it’s no surprise security deposit deductions are still a common source of conflict. That’s why it’s important to document the return of security deposit funds and any deductions for damages to avoid disputes. This is done with a security deposit return letter.
This guide explains how to write a landlord deposit refund letter and what to include. Plus, there’s a free security deposit return letter template to help you navigate the process efficiently.
Key takeaways
- A security deposit return letter documents the return of tenant deposits and the amount refunded or deducted.
- Most states require an itemized list of deductions if the full deposit isn’t refunded, typically within 14 to 60 days after lease termination.
- A separate security deposit account simplifies record-keeping, helps track interest (if required), and ensures compliance with state laws.
- A proper return letter should include tenant and lease details, original deposit amount, itemized deductions, refund balance, and contact information.
- Sample letters for full, partial, and no refunds help landlords provide clear, legal, and professional communication with tenants.
What is a security deposit return letter?
A security deposit return letter (also called a security deposit return form or damage deposit return letter) outlines security deposit terms, deductions, and how much of the deposit will be returned to tenants after they move out.
If you aren’t refunding the entire deposit, most states require you to provide an itemized security deposit deduction letter. You can put these details in a security deposit deposition form and send it with the return of deposit letter.
Why is a letter to return a security deposit important?
A lease deposit return letter provides a written record of deposit transactions. Here’s why it’s important:
- State laws: Generally, you have between 14 and 60 days after a lease period ends to return a security deposit and provide a list of deductions. A security deposit return letter shows you notified tenants within the required time frame.
- Security deposit disputes: A landlord security deposit return letter serves as a legal record for any disputes over security deposits. It documents the initial deposit amount, an accounting of deductions, and the amount returned.
- Insurance claims: Information in the return of the security deposit letter can be used to file an insurance claim for expensive damages that are more than what you can deduct from a deposit for repairs.
Always check local security deposit state laws to ensure your tenant security deposit return letter covers all the legal bases.
Having a separate bank account for security deposits makes it much easier to write a security deposit return letter, especially if you’re managing multiple units or properties. Even in states that don’t require separate accounts, it helps prevent deposits from getting mixed up with other payments or used for operating expenses.
This way, you have all of your tenant’s security deposit information in one place instead of hunting through statements to figure out when and how much they paid or if there were any deductions. Plus, you can see interest accrued on a deposit that will be added to the amount returned in states where security deposits must be held in an interest-bearing account.
Legal considerations for security deposit return letters
Understanding the requirements for letters to return security deposit funds is critical to avoid penalties and tenant disputes. Here are key legal aspects to consider:
State-specific deadlines
Most states have rules for how many days a landlord has to return security deposits and when to send a letter for security deposit returns. For example, New York requires landlords to return deposits and provide an itemized receipt for any deductions within 14 days of a tenant moving out.
Itemized deductions requirement
Most states require you to include an itemized list of deductions with the rental deposit return letter if any amount is withheld from the security deposit. This should include:
- A description of the damage or unpaid rent.
- The cost of repairs or deductions.
- Supporting documents such as receipts, estimates, or photos.
Tenant dispute rights
Tenants have the right to challenge deductions by sending a tenant dispute security deposit deductions letter and may take legal action in small claims court. Common disputes for deductions include cleaning, property damage, and unpaid rent.
To prevent disputes:
- Keep detailed move-in/move-out records.
- Take date-stamped photos of property conditions.
- Provide clear, timely documentation of deductions.
Penalties for non-compliance
Failure to return the deposit or notify tenants of deductions on time can result in penalties or tenants suing for double or triple damages. Here are some state examples:
- Maryland: Tenants can recover up to three times the withheld amount plus attorney fees if a landlord unjustly withholds a deposit beyond 45 days.
- Illinois: Landlords must return the deposit within 45 days or could potentially owe tenants double the deposit amount.
- Florida: Failing to notify a tenant of deductions within 30 days can result in landlords forfeiting the right to withhold any portion of the deposit.
How to write a security deposit return letter
While the rules for refunding security deposits vary by state, security deposit return letters generally include the following information:
- Tenant information: Include the tenant’s name and mailing address. Mention the names of any other tenants on the lease agreement.
- Lease details: Add your rental property address and the lease term dates. Mention security deposit terms and state laws outlined in the rental agreement.
- Original deposit amount: Note the security deposit amount received at the beginning of the tenancy and include a copy of the security deposit receipt. This serves as a reference point for allowable security deposit deductions.
- An itemized list of deductions: If you’re withholding any of the deposit, provide an itemized security deposit deduction list. Include descriptions and incurred expenses for repairs beyond normal wear and tear, unpaid utilities, or unpaid rent.
- Cleaning and repair receipts: Provide copies of receipts for any additional cleaning fees or repair costs. This shows your deductions are for legitimate charges.
- Remaining balance: State the total amount deducted from a security deposit (if applicable) and the remaining balance to be returned. Refunds may include interest in some states requiring a separate security deposit account.
- Contact and deposit details: Include your name, address, and contact information for any follow-up questions. Also, explain when and how a deposit is returned.
Free landlord returning security deposit letter samples
To help get you started, we’ve included security deposit return letter samples for a full refund, partial refund, and no refund. Each sample has a free downloadable security deposit return letter PDF and a security deposit refund letter Word document.
Security deposit letter sample for full refund
John Doe
123 Tenant Lane
Anytown, USA
December 21, 2024
I am writing to inform you that your security deposit of $1,000 will be fully refunded for the rental unit located at 456 Rental Road, Anytown, USA, for the lease period of 08/01/2022 to 07/31/2023.
You will receive a check for the entire security deposit amount within 14 days, as per our lease agreement and state regulations.
Sincerely,
Jane Smith
[Signature]
555-123-4567
789 Landlord Avenue
Anytown, USA
Security deposit return letter sample for partial refund
Emily Johnson
321 Tenant Street
Cityville, USA
December 21, 2024
This letter serves as a statement for your security deposit of $1,500 for the property located at 789 Rental Boulevard, Cityville, USA, for the lease period of 09/01/2022 to 08/31/2023.
Based on our rental agreement and state regulations, I have deducted $350 from your security deposit for the following:
- Carpet Cleaning Cost: $200
- Repair of Broken Window: $100
- Unpaid Utility Bill: $50
The remaining balance of your security deposit is $1,150. I will return this amount by direct deposit within 21 days.
For any queries, feel free to contact me.
Sincerely,
Michael Brown
[Signature]
555-123-4567
123 Landlord Road
Cityville, USA
Security deposit return letter sample for no refund
Sarah Thompson
456 Renter’s Way
Townsville, USA
December 21, 2024
This letter is regarding your security deposit of $2,000 for 123 Lease Lane, Townsville, USA, for the lease period of 10/01/2022 to 09/31/2023. It has been determined that the cost of property damage and unpaid rent exceeds the deposit amount.
Deductions totaling $2,000 are as follows:
- Extensive Kitchen Damage: $1,200
- Unpaid Rent for June: $800
As a result, your security deposit will not be refunded. Attached are the itemized deductions and relevant documentation for your reference.
Please contact me for any further clarification.
Sincerely,
David Clark
[Signature]
555-123-4567
789 Landlord Street
Townsville, USA
How do you send a letter regarding security deposit returns?
Sending a tenant deposit return letter through the proper channels is essential for maintaining professionalism and complying with legal obligations. Here’s how to effectively deliver this document:
- Get the tenant’s forwarding address: Before the tenant moves out, request their new mailing address to deliver the security deposit return letter and any accompanying refund. If your tenant didn’t provide a forwarding address, you can mail the security deposit to their last known address and follow up via email to maintain a documented record of the correspondence.
- Choose a reliable delivery method: Send the tenant refund deposit letter via certified mail, email (with acknowledgment), or deliver in person. Certain states may dictate the delivery method. For example, Florida requires certified mail for sending a security deposit return letter if any portion of the deposit is withheld.
- Get delivery confirmation: Get proof of delivery for your records. This can be a return receipt for certified mail, a read receipt for email, or a signature for in-person delivery.
- Include required documents: Along with the letter, enclose any relevant documents, such as an itemized list of deductions, receipts for repairs, or photographs of damages.
- Keep copies for your records: Keep copies of the security deposit return letter, all attachments, and proof of delivery. This documentation serves as evidence of compliance with legal obligations and can be invaluable in case of any future disputes.
Following these steps will help ensure the security deposit return process is handled efficiently, transparently, and according to legal requirements.
How to handle a security deposit return letter for partial or no refunds
Handling a partial or no refund rental security deposit return requires a structured, transparent, and legally compliant approach. To avoid disputes, you must clearly document deductions, provide supporting evidence, and communicate professionally with tenants. When issuing a landlord letter returning a security deposit, follow these steps:
Conduct a move-out inspection
- Schedule an inspection with the tenant present to address any concerns in real time.
- Use a move-in/move-out checklist to compare the unit’s condition at the start and end of the lease.
- Take date-stamped photos or videos of any damage beyond normal wear and tear.
- Document lease violations, such as unauthorized pets, smoking, or unapproved modifications.
Review the lease agreement
- Check for clauses on tenant responsibilities, including cleaning and repairs.
- Verify if unpaid rent, utilities, or fees can be deducted from the deposit.
- Ensure compliance with state laws, as some states limit what you can deduct.
Here’s a free lease agreement template to make sure everything is covered from the start.
Determine deductible costs
Allowable deductions can vary based on state regulations, but here are some general guidelines:
Allowable deductions:
- Unpaid rent or utility bills.
- Excessive cleaning fees (if beyond normal wear and tear).
- Property damage (holes in walls, broken appliances, pet damage).
- Unpaid late fees or lease violation fines.
Non-allowable deductions:
- Routine wear and tear (minor carpet wear, faded paint).
- Pre-existing damages that weren’t repaired before the tenant moved in.
- General cleaning that a reasonable tenant wouldn’t be expected to handle.
Provide proper documentation
- Include an itemized list of deductions with descriptions and costs.
- Attach receipts, invoices, or repair estimates for deductions.
- Reference before-and-after photos to justify damages.
- Cite the relevant lease clause that supports the deduction.
Communicate deductions with the tenant
- Notify the tenant in writing about the refund or deductions.
- Clearly state that a portion or all of the deposit is being withheld due to damages or unpaid rent.
- Inform the tenant of their right to dispute the deductions.
- If applicable, outline further legal steps if additional funds are owed beyond the deposit amount.
- Process any refunds within the legal timeframe.
Failure to provide an itemized security deposit deduction letter may result in legal penalties in states that require detailed breakdowns.
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Each part of a security deposit refund letter should be easy to understand, leaving no room for misinterpretation. To make the deposit refund process even easier, consider using a Baselane security deposit account.
Easily create multiple accounts per property while earning up to 3.35% APY2, with no account fees or minimum balances. Plus, you can screen tenants, e-sign leases, and automate bookkeeping and tax packages (plus more) all in the same place for complete control over your cash flow without all the extra admin.
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FAQs
What information should I include in a security deposit return letter?
A security deposit return letter should include:
- Tenant details (name, rental property address)
- Lease information (start and end dates)
- Original security deposit amount
- Itemized deductions (if applicable, with descriptions and costs)
- Final refund amount and payment method
- Landlord contact details (name, address, phone, email)
- Date of letter and return timeframe
Providing a clear, itemized breakdown ensures compliance with state laws and helps avoid disputes. Here’s a guide for security deposit accounting to make sure you’re recording and returning the correct deposit amount.
How soon do I need to send the return letter after the tenant moves out?
Landlords must send a security deposit return letter within 14 to 60 days after the tenant moves out, depending on state laws. Most states require 30 days, but some, like California (21 days) and New York (14 days), have shorter deadlines. Failing to return the deposit on time can lead to penalties or tenant disputes.
Using a separate security deposit savings account or escrow account for security deposit (depending on state laws) helps ensure the funds are held and returned properly.
How to write a security deposit dispute letter?
To dispute a security deposit deduction, tenants must send a letter to the landlord within the required timeframe (usually 15 to 30 days), including:
- Tenant details: Name and address
- Date of response
- Landlord details: Name and address
- Original deposit amount and move-out date
- Reason for dispute: For example, unjust deductions, lack of itemized list
- Supporting evidence: Photos, move-in/move-out checklist
- Requested resolution: Full or partial refund
How to write an itemized security deposit letter?
An itemized security deposit letter should include:
- Tenant and property details: Name, rental address, move-out date
- Original security deposit amount
- Itemized list of deductions: Description, cost, receipts (if applicable)
- Final refund amount and payment method
- Landlord’s contact information
- Deadline for refund processing
How detailed should the itemized deductions be?
Itemized security deposit deductions should be clear, specific, and well-documented to comply with state laws and prevent disputes. Each deduction should include a detailed description of the damage or charge, such as “carpet stain removal in the bedroom,” along with the cost of repair or cleaning and any supporting evidence, like receipts, estimates, or before-and-after photos. Additionally, including the date of repair or service and referencing the move-in checklist helps justify the deduction.
How do I handle partial refunds in the letter?
When issuing a partial security deposit refund, provide a clear breakdown of deductions and the remaining refund. The letter should include the original deposit amount, an itemized list of deductions with descriptions and costs, the final refund amount, and the payment method. Attach receipts or photos to justify deductions and ensure compliance with state laws.
Use our sample letter to return security deposit funds for partial returns to make sure you don’t miss anything.
Can I use a template, or should I write a custom letter each time?
You can use a security deposit return template to save time, but it’s essential to customize each letter with tenant-specific details. The template for security deposit refund letters should include the tenant’s name, rental address, lease dates, original deposit amount, itemized deductions (if any), and final refund amount. Personalizing the letter ensures compliance with state laws and helps prevent disputes.
How long does a landlord have to return security deposit funds?
The timeframe for returning security deposit funds varies by state law, typically ranging from 14 to 60 days after the tenant moves out. For example, California requires returns within 21 days, New York within 14 days, and Texas within 30 days. Failure to meet the deadline may result in penalties or legal disputes. Always check state-specific regulations to ensure compliance.
How long do security deposit refunds take?
The security deposit will need to be returned within 14 to 60 days after the tenant moves out, depending on state laws and deductions. Landlords must process refunds within the legal timeframe to avoid penalties or disputes.
Are landlords required to return security deposit funds?
Yes, landlords are legally required to return a tenant’s security deposit unless deductions are justified. If deductions are made for unpaid rent, damages, or cleaning beyond normal wear and tear, landlords must provide an itemized list within 14 to 60 days, depending on state laws. Failure to comply can result in penalties or legal action.
