As a landlord, you likely collect a security deposit from tenants moving into a rental property. When a lease ends, it’s important to document the return of security deposit funds and any deductions for damages to avoid legal disputes. This is done with a security deposit return letter.
This article explains what a security deposit return letter is, why it’s important, and how to write one. Plus, we provide a free security deposit return letter template to help get you started.
What is a security deposit return letter?
A security deposit return letter (also called a security deposit return form) 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 landlords to provide an itemized statement of deductions. 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 letter to return security deposit funds provides a written record of deposit transactions. Here’s why it’s so 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 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 make sure 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 clearly 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.
How to write a landlord 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. This serves as a reference point for allowable security deposit deductions.
- 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 interest-bearing account for security deposits.
- 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 a sample letter to return security deposit funds for a full refund, partial refund, and no refund. Each sample has a free downloadable security deposit return letter template.
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
Dear Emily Johnson,
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
Dear Sarah Thompson,
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
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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 free Baselane security deposit account. Create multiple accounts per property while earning up to 3.35% APY2, with no account fees or minimum balances.
