Sample Letter: Refunding and Not Refunding the Security Deposit

Security deposits are collected by landlords or property managers before the start of a new lease agreement. These deposits act similarly to an insurance policy for both parties, in the event of debt, damage, or debris.

State legislation requires landlords to return security deposits within a certain period after the lease’s end, usually from 30-60 days after the lease ends.

If you need to deduct expenses from a tenant’s security deposit, we’ve got you covered. Here’s everything you need to know about not returning security deposits, including a security deposit refund letter template.

Refunding the Security Deposit in Full Letter Template

[Your Name]

[Community Name]

[Community Address]

[Date]

[Tenant Name]

[Tenant Forwarding Address]

Re: Security Deposit Refund

Greetings [Tenant Name],

This letter is to inform you about the status of your security deposit for the leased unit located at [Property Address and Unit Number]. You submitted a security deposit totaling, [Security Deposit Total Amount], for your lease term beginning in [Lease Start Date] and ending [Lease Term End Date]. Your security deposit is being fully refunded to you with this letter. I’ve attached a check for the full amount of your security deposit.

Thank you for renting with [Community Name]. I am thankful for the experience of having you as a tenant. Best of luck in your future endeavors.

Sincerely,

[Your Name Printed]

[Your Signature]

When Do You Need to Send a Security Deposit Refund Letter

Landlords are legally required to send a security deposit refund letter in cases where they will not be refunding the security deposit in full. This includes partial refunds and any time

However, many landlords opt to send security deposit refund letters when returning the security deposit in full, too.

Before your tenants moves out, it’s essential to collect a forwarding address from them. This is where you’ll send your security deposit letter or mail a check for the security deposit. If your tenant has written a notice to vacate letter, they may have included a forwarding address in it.

The grace period for refunding security deposits varies by state. Nolo has a super informative state-by-state security deposit refund timeline chart to help you determine your state’s laws. You can also go to your state’s website to get the most up-to-date legislation on the topic.

While you don’t legally have to refund a security deposit, it’s illegal to not provide notice of your intent to not refund the security deposit and to withhold the deposit for longer than what is allowed by your state’s grace period.

If you don’t send a security deposit letter to your previous tenant within the grace period, you risk legal consequences.

A tenant may sue you for withholding their security deposit if you do not send a letter with an itemized statement regarding why you withheld the funds or if you return the funds outside the grace period.

In short, avoiding unnecessary legal fees and the potential penalty payments is as simple as sending a security deposit letter in a timely manner.

Not Refunding the Security Deposit Letter Template

[Your Name]

[Community Name]

[Community Address]

[Date]

[Tenant Name]

[Tenant Forwarding Address]

Re: Security Deposit Refund

Greetings [Tenant Name],

This letter is to inform you about the status of your security deposit for the leased unit located at [Property Address and Unit Number]. You submitted a security deposit totaling, [Security Deposit Total Amount], for your lease term beginning in [Lease Start Date] and ending [Lease Term End Date]. As a result of [Provide Reason], your security deposit will not be refunded in full.

Below, you will find an itemized statement outlining the expenses deducted from your security deposit.

• [Incurred Expense (Example: Missing Key Fee and Replacement - $50)]
• [Incurred Expense]
• [Incurred Expense]

The deductions amount to [Deduction Total] leaving [Amount Left of Security Deposit]. I have refunded the remaining portion of your security deposit via a check attached to this letter.

Thank you for renting with [Community Name]. I am thankful for the experience of having you as a tenant. Best of luck in your future endeavors.

Sincerely,

[Your Name Printed]

[Your Signature]

Note: If you are not refunding any of the security deposit, amend the last sentence to read, “As there is no remaining portion of your security deposit after deductions, you will not be receiving a refund.”

When Should You Not Refund the Security Deposit

During the refund grace period, you should inspect the vacant unit to assess its condition. Always take and date pictures during the inspection. These pictures can serve as evidence if the tenant sues you for not having their security deposit refunded.

In an ideal scenario, the security deposit is returned in full after the unit is found in acceptable condition and does not require extra cleaning, repairs, or garbage removal.

Unfortunately, this isn’t always the case. In fact, there are many situations in which a landlord may not return a security deposit to a tenant, typically because of debt, damage, or debris.

Here’s a breakdown of some of the most common reasons a landlord should not refund the security deposit in full.

Tenant Has Outstanding Unpaid Rent Debt

When a tenant has unpaid rent at the end of their lease term (or after an eviction), a security deposit can be legally withheld to cover some or all of the outstanding debt.

Because most landlords collect first and last month’s rent in lieu of a security deposit, many tenants may feel that they are not responsible for paying the last month of rent. However, this tactic is widely discouraged and has recently been banned in some states.

In the event that a tenant causes property damage or you need to pay for professional cleaning services in the unit, those expenses will need to be paid out of the landlord’s pocket. There will be no security deposit to cover those costs.

Tenant Has Caused Excessive Property Damage

Excessive damage is usually easy to spot, as it goes beyond the normal wear and tear expected during an extended stay. Small stains, rips, scratches, or holes in the wall (for hanging decor) are fine.

Holes that are larger than an inch in diameter, deep scratches, and massive stains, all fall under the excessive damage umbrella. Here are some additional examples of excessive damage:

• Substantial Water Damage
• Broken Windows or Mirrors
• Severely Damaged Countertops
• Lost Keys
• Missing or Broken Appliances (refrigerator, smoke detectors, washing machines, etc.)

Whether you’re paying for repairs or replacements, these costs should come out of the security deposit.

Tenant Has Left Excessive Debris in the Unit

It’s the tenant’s responsibility to leave the apartment in the same condition they found it, meaningany furniture, decor, or appliances they may have brought into the unit must leave with them when they leave.

That said, many tenants leave these items behind. If a tenant leaves a couch or another large piece of furniture, you can deduct the cost of item removal from the security deposit.

Worse yet are the tenants who leave behind messes. Whether it’s a hoarder situation or someone who left a lot of their belongings behind, you can use security deposit funds to pay for professional cleaning services.

Final Thoughts

Unfortunately, not every tenant knows how to get a security deposit refunded. In those cases, the security deposit will serve its purpose and allow you to get your unit back in ready-for-rent condition.

Once your unit is back in the right shape, it’s important to take pictures and get it listed to fill your vacancy.

Luckily, listing on Apartment List can help you get a vacancy filled quickly. Prospective tenants are matched to your units based on their preferences, so you’re connected with high-value applicants every time.

Want to learn more about how Apartment List can help you generate more income through filled vacancies? List with us.