How to Return Security Deposits

Collecting a deposit helps ensure the tenant leaves the property in good condition.

Security deposits are generally collected when a tenant leases or rents property from a landlord. The landlord keeps the security deposit to cover any damages, cleaning fees or past-due rent balances after the tenant vacates the property. However, each state has specific time requirements and guidelines for returning deposits. Therefore, knowing your state and local guidelines is helpful because this ensures there are no disputes regarding the distribution of funds.

Things You'll Need

• Letter
• Receipts
• Check

Instructions

1. Review the state and local guidelines for returning a rental or lease deposit in your area. For instance, Colorado requires that the landlord return the deposit and provide a written statement within 30 days.

2. Compose a letter to the tenant stating what deductions, if any, you are taking from the security deposit. Include the tenant's name and address, the information from the original lease providing the deposit amount and reasons it may be kept, the list of specific deductions, such as unpaid rent, cleanup fees and repairs, along with the final amount of the returned deposit.

3. Add a clause to the letter stating that by accepting this return deposit check, the tenant accepts the terms and conditions listed within the letter. Proof that the tenant accepts the terms and the amount of the deposit returned is obtained from the canceled check signed by the tenant.

4. Sign and date the letter. Make copies of the receipts for repairs or replacement costs for which the deposit is used. Provide the tenant with the copies and keep the originals.

5. Mail the letter to the tenant's new address or deliver it by hand. Include a check in the letter for the amount of the return deposit.

Tips & Warnings

• Keep a copy of each document for your records. Do not send cash, since the check acts as proof of receipt of the deposit.

• Only deduct costs that are specifically stated in the original rental agreement. For instance, if a cleanup fee is not listed in the original agreement, do not deduct it from the deposit.

References

• Colorado State University: Renting: Security Deposits
• Legalzoom: Landlord's Letter Returning Security Deposit and Guide
• RentLaw.com: Landlord Tenant Security Deposits

Resources

• San Francisco Tenants Union: Getting Your Security Deposit