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How to write a security deposit return letter [Free template]

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by Jeff Rohde, posted in Investment Strategy

When you rent your property, you’ll likely collect a security deposit from your tenants. This is money that they give you to ensure that they take good care of the property while living there and that they’ll leave it in the same condition as when they moved in.

Once your tenants have moved out, it’s time to send them their security deposit return letter. This document tells them what portion of their security deposit you’re keeping and why.

Here are some tips on how to write a great security deposit return letter, plus a free template you can download and customize for your own use.

Key takeaways

  • A security deposit letter is a document that outlines damage done to a rental unit and how much of the security deposit the landlord plans to keep to cover the cost of repairs.
  • It’s important to be as specific as possible when listing damages, including dates, descriptions, and estimated cost of repairs.
  • Be sure to take photos or videos of the damages to include with the security deposit letter.
  • The letter should be sent within the legally required timeframe of the tenant’s move-out date.
  • The security deposit letter should be sent by certified mail with a return receipt requested so you have proof that the tenant received it.
  • The letter returning a security deposit should be kept on file in case of a dispute later.

The security deposit return letter: what it is and why you need one

A security deposit return letter is a document a landlord uses to return the security deposit to a tenant. This letter outlines the amount of money being returned and the total amount of any deductions made for damages or unpaid rent.

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A security deposit return letter protects the rental property owner from liability if there are any disputes over the return of the security deposit, and it also provides documentation for the tenant in case they need to file a claim with their security deposit insurance company.

In addition, a security deposit refund letter can help protect the landlord’s interests by documenting the rental unit’s condition at the end of the tenancy.

How to write a security deposit return letter

The letter should state whether the deposit is being returned in full, partially returned, or not returned at all. It should also explain the reason for any deductions. For example, if the landlord deducts money for damages, they should specify what those damages are.

The general structure of a security deposit return letter includes:

  • Landlord’s name and contact information
  • Tenant’s name and contact information
  • Date of the letter
  • Amount of security deposit being returned to the tenant
  • Breakdown of any deductions made from the security deposit, including an explanation for each deduction
  • Enclose any relevant receipts or documentation with the letter, such as a repair quote from a qualified repair person or photos of the items damaged
  • A copy of the lease or deposit agreement to remind the tenant what they agreed to
  • Signature of the landlord or authorized representative

Free security deposit return letter template

To help make your life as a landlord a little bit easier, we’ve created a security deposit return letter template that you can download for free and customize for your individual needs. Download the security deposit return letter here.

Also included is the wording you may wish to use if you are withholding all or part of the security deposit:

security deposit return letter

You can also download for Google Docs. After you open the document, save it by another name so that you always have the original to go back to.

How to send a tenant a security deposit return letter

It’s always a good idea for landlords to send a security deposit return letter to their tenants by certified mail or another method with proof of delivery to the tenant’s forwarding address.

Doing so provides documentation that the landlord did return the deposit and is professional and attentive to detail, and is taking responsible steps to comply with state and local laws regarding security deposits.

Mistakes to avoid when writing a security deposit return letter

While writing a security deposit return letter is relatively straightforward, it’s still possible to make a mistake. Here are 5 common errors to avoid when writing a letter to return a security deposit to a tenant:

  1. Not itemizing deductions: When landlords deduct money from a security deposit, they must provide a detailed, itemized list of all charges along with the corresponding receipts. Without this documentation, tenants may have difficulty understanding why they are being charged for certain items and may contest the deductions.
  2. Making unauthorized deductions: Landlords can only deduct from a security deposit for damages that exceed normal wear and tear. If a landlord tries to make unauthorized deductions, the tenant may be able to get the money back by filing a complaint with the state or local consumer protection agency.
  3. Withholding the full amount of the security deposit: In some states, landlords can only withhold a portion of the security deposit, even if there are damages. For example, if the total damages are $500 and the security deposit is $1,000, the landlord can only withhold the $500 deposit. In a situation where the amount of damages exceeds the security deposit amount, the tenant is responsible for any remaining damages, but it is up to the landlord to collect the balance due.
  4. Failing to return the security deposit within the required time frame: In most states, landlords have between 14 and 60 days to return the security deposit to the tenant unless they provide a written explanation of why they are withholding part or all of the deposit. If the landlord does not return the deposit within the prescribed time frame, the tenant may be able to sue for double the amount of the deposit.
  5. Not having a written policy on security deposits: Landlords should have a policy outlining when and how the deposit will be returned to the tenant. This policy should be provided to the tenant at move-in and included in the lease agreement. A written policy can deter misunderstandings between landlords and tenants about the security deposit return.

If you find yourself struggling coming up with wording for the letter, here’s a free template to customize.

Remember that security laws are different for each state. The legal resource website Rocket Lawyer maintains a state-by-state guide to security deposit laws outlining the requirements and restrictions that may apply to landlords and tenants.

Closing thoughts

There are a few things that landlords should keep in mind when the time comes to write a security deposit return letter. First and foremost, it is important to be clear and concise in the letter. Landlords should avoid using jargon or legal terms that tenants may not understand.

Also, landlords should list any damages that were found during the move-out inspection, as well as the cost of repairs. Finally, landlords should sign and date the letter before sending it to the tenant.

By following these simple tips, landlords can ensure that their security deposit return letters are clear and easy to understand.

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