For those relatively new to the business of being a landlord, there are plenty of questions around your responsibilities, not least of which surround security deposits. What are landlords permitted to deduct from security deposits? When are you required to return a deposit to a tenant? What is a security deposit return letter? For those still feeling their way into the role of landlord, here is a basic outline of what is typically included in a security deposit return letter.
The security deposit exists, as the name suggests, to provide security to landlords in the event of expenses related to a tenant moving out. If part of the deposit is being withheld for a reason provided for in the lease, delineate those reasons and the associated expense. Some of the reasons a deposit may be partially or fully deducted are:
Any rental unit is going to require some level of care after a tenant moves out, but so long as the “damage” falls within what is considered normal wear-and-tear — scuffs, scratches, stains, and everything else that occurs in the course of living in a place for months or years—they shouldn’t be held liable for the cost associated with relatively minor fixes. In withholding a security deposit, be detailed and specific about the associated damage in case the tenant chooses to challenge the deductions. It’s a good idea to put the information in a letter, even prior to the actual return of any remaining monies.In asserting claims about the damages, you should also afford the tenant an opportunity to see and respond to the provided list. If the damage exceeds the amount of the security deposit, you can involve a lawyer to assist with letters and any future action on collection.
To avoid any appearance of impropriety, you should fully detail the particulars related to the security deposit, including the dates and term of the lease; how much was deposited and any interest accrued, if you are required to deposit the money in an interest-bearing account; the itemized deductions from that amount; any additional amount owed; and receipts and bills from required repairs or cleaning.
Given that any tenant may feel aggrieved at getting back less than their full deposit, it’s important that your lease details exactly what their responsibilities are for maintenance and repair and what damage falls outside those bounds, as well as what other conditions may result in a partial or full deduction from the security deposit. It’s important to consult an attorney to ensure all these charges fall within what is allowed by law.
Your security deposit return letter should both cite and adhere to the law in your state as to the deadline for returning a deposit to a tenant. Laws vary by state in terms of how much time is afforded landlords in returning security deposits, so you may want to consult with an attorney to see when you need to have that check in the mail.
As with any correspondence regarding your rental property, it’s advisable to keep your letter professional in its comportment. Don’t deduct money out of spite, or intimate threats to try and collect on additional money owed. Make sure it sticks to just the facts, and that it stays within the bounds of the law.
A letter returning a security deposit should actually include the money, usually in the form of a check made out to the tenant. If you’re returning the full amount there’s less needed in the way of explanation, but if the amount returned is less than what was deposited on the day the lease was signed, you’ll have to let your now-former tenant know why. This itemized list should be agreed upon in advance, if possible. If you're required by law to deposit a tenant’s security deposit in an interest-bearing account, you will have to return and indicate the earned interest as well on the letter.
Landlord issues can be difficult to navigate without all the knowledge. Fortunately, you can turn to LegalShield’s Home Business Supplement for help with any landlord-tenant issues that may arise, so you’re not left figuring it out on your own. Sign up today!
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