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Security deposit return letter

This Agreement is entered by and between Jonas Adam, individually or collectively as the "Signee" and Jane Smith, as the "Signer", together referred to as the "Parties".
The Contract is dated [the date both parties sign].

1. Agreement terms

The Parties agree that the following agreement is dependent on the terms presented as follow:

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Security deposit return letter

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What is a security deposit return letter?

A security deposit letter is an important document that clearly outlines the expectations and responsibilities of a landlord and a tenant at the end of the tenant’s stay in the landlord’s property. While the letter is certainly centered around the return of the security deposit, as its name would suggest, it also describes other important terms at the conclusion of the rental period, such as what costs the tenant is responsible for covering.

Usually, a security deposit return letter is based heavily on the terms of the original rental agreement as well as the landlord’s and tenants’ inspection and evaluation of the state of the rental property at the end of the rental period. So, while many of the terms and expectations outlined in the agreement may not be a surprise to either party, it is often best to have these in writing to ensure there are no disputes when a rental ends, or have a clear means of resolving those speeds quickly if they do arise.

For example, if original rental agreement outlined that tenant is responsible for any damages beyond normal wear and tear to the property’s appliances, such as a washing machine or dishwasher, and if at the end of the rental period both the landlord and the tenant agree that there is damage to those, then security deposit return letter will outline how much of the tenant’s security deposit is withheld to pay for the cost of refurbishing or replacing those appliances.

When do you need a security deposit return letter?

Just like a rental agreement itself or a sublease agreement, it is often better to have a security deposit return than not. There are many security deposit return letter templates available in different formats, and it is not too complicated to create and sign one. However the benefits of having an explicit agreement strongly outweigh any time or cost needed to make the letter. Having the letter can help reduce or eliminate any possible conflict or dispute that arises about the cost of the security deposit for any damages incurred during on the rental period.

What should a security deposit return letter contain?

The exact content of a security deposit release letter will depend on several factors, including how explicit this part of the rental was outlined in the original rental agreement, as well as what potential costs for reimbursements the tenant is responsible for on the property itself. However, there are several common clauses that will appear in many security deposit return letters:

Interest rate on the security deposit

The vast majority of states in the United States require that a security deposit be held in a financial account that bears interest. That means oftentimes the tenant will receive more money back from their security deposit than they originally gave the landlord if they’re not responsible for additional costs. The security deposit agreement and the security deposit return agreement should contain an explicit outline of not only how much is originally paid for the security deposit, but also what the interest on the deposit is. This will make it easy at the end of the period to determine how much should be paid back to the tenant.

Timeframe of the rental

Like the rental agreement itself, it can be helpful in security deposit return agreement to state explicitly the timeframe in which the tenant was paying rent, the frequency that they pay rent, and any other costs associated with them staying in the rental.

Use of the security deposit

Even though tenant paid the security deposit at the beginning of the rental, and even though the security deposit was kept in an interest-bearing account, not all of the security deposit and interest are paid back to the tenant by default. The landlord or the manager will visit the property to determine if there is any damage done or any issues that were caused by the tenant during their state that were not covered under the original rental agreement. In that case, the cost to repair this damage is one often paid out of the security deposit. Exactly what is covered and what is not covered by the security deposit and what the tenant versus the landlord is liable for will outlined in the original rental agreement.

How long does a landlord have to return a security deposit?

As with most aspects of law in the United States, the amount of time a landlord has to return a security deposit depends on the state in which the individual lives. This return period is set on a state by state basis and can vary from as short as 14 days to as long as 60 days. See below for a full list of the time that a landlord has to return the security deposit in each state.

Although this time limit is set at the state level, it could be helpful to have the time limit also written explicitly into the contract to make sure everybody's expectations are aligned and that the timeframe is explicit with both parties.


What happens if the landlord doesn’t return the entire security deposit?

In the event that the landlord does not return the entire security deposit, they should clearly outline why the entire deposit is not being returned and itemize the costs associated with the lesser amount. There are certain cases that would enable the landlord to return less than the full security deposit. While this is not an exhaustive list, some examples of this situation would include:

  • A tenant leaving the property before paying their rent entirely
  • Any major damages to the apartment or associated property that is not covered under the original rental agreement
  • Creating extremely dirty or unsanitary or unusual wear and tear damages to the property beyond what is reasonably covered in the original rental agreement
  • If the tenant left positions in the property itself that necessitated removal or cleaning beyond what was outlined in the original agreement
  • If the tenant terminated their rental early and incurred a penalty or some other cost as outlined in the original rental agreement
  • If by terminating the agreement early or in some other way the tenant left the landlord with unpaid bills associated with the property, such as utilities, phone, and the Internet.

Should the landlord or tenant write the security deposit return letter?

Often times the landlord themselves will write the security deposit return letter, especially if the landlord owns many buildings and properties or if the landlord uses a professional management company to manage the day-to-day operations of the properties. In that case, the security deposit return letter will be a template that they use over and over. 

However, that doesn't mean that the tenant themselves should not read the agreement carefully and ensure that it reflects not only the terms set in the original rental agreement but also reflects any changes or important updates in apartment during the time that they stayed there that would affect the security deposit return, such as any damages or other associated costs.

Is there anything special to know about signing the agreement?

Note that both parties should sign the agreement once it has been filled out completely and verified by both of them. It is not considered valid unless both have signed and dated the agreement. Whether the security deposit return agreement is signed electronically such as on a PDF or other service, or a paper copy is signed, both parties should keep a copy of the agreement for their records, in case it is needed in the future.