What Is a Security Deposit Refund Letter?

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If you move out of a rental apartment, there’s a good chance you’ll receive a security deposit refund letter from your landlord. A security deposit is an important part of your responsibilities as a tenant and can be a significant expense, so as a tenant you need to understand what this means.

What is a security deposit?

First, let’s cover the basics. What is a security deposit and how is it relevant to your life as a potential tenant?

A security deposit is a sum of money tenants give their landlords before moving into a rental location, often equivalent to one or two months’ rent. A security deposit is a kind of insurance for the landlord in case a tenant damages the apartment or fails to pay part of their rent or utilities. The security deposit is usually refundable at the end of your lease, assuming you haven’t caused damage beyond general wear and tear and have paid your rent and other charges in full.

A landlord usually has a certain amount of time, often 30 days, after the end of your lease to return your security deposit. Check the terms of your lease to confirm details. When your security deposit is returned, it must include the interest accrued by the owner.

What is a security deposit refund letter?

A security deposit refund letter is a letter your landlord gives you when you return your security deposit. Homeowners typically follow a basic template for a security deposit refund letter, with information on how much of the security deposit is being refunded. The security deposit refund letter should include basic information such as your name, home address, owner’s address and signature.

If it does not reimburse you for your full security deposit, your landlord should include in the letter a detailed list of the costs associated with each repair for which the tenant is responsible. In other words, it is an itemized receipt for which the security deposit has been spent, if it has not been refunded.

The letter should be sent to your return shipping address and is usually accompanied by a check for the remainder of your security deposit owed to you. Many homeowners send the security deposit refund letter by certified mail to ensure it reaches you and to prove that it has been received.

Although laws and regulations vary by jurisdiction, many places require a landlord to send a security deposit refund letter if they do not return any part of the tenant’s security deposit.

What can my landlord deduct from my security deposit?

There are several reasons why your landlord may deduct something from your security deposit or keep the full amount, which should be detailed in your lease. If your landlord does not return all or part of the deposit, they should explain exactly why in the security deposit refund letter.

Here are some common reasons a homeowner may deduct from your security deposit:

  • Property damage greater than normal wear and tear
  • A penalty for breach of lease
  • Unpaid rent or utilities

As the tenant, you are not responsible for normal wear and tear. This can include things like:

  • Nail or pinholes in the wall
  • Non-excessive dust or dirt
  • Wear on carpets or floors
  • Brightening on walls or wallpaper from the sun
  • Broken bulbs
  • Abandoned property in the apartment that must be moved
  • Deformation, scuffing or other wear due to age and normal use

What is a virtual tour?

To make sure you know exactly what you are responsible for as a tenant, be sure to visit your landlord at the start of your lease and again at the end. This is an inspection where you both document any damage to the house to determine what the tenant is and is not responsible for the damage. You can also document any damage found in writing and in photographs before moving in so that you are not liable later.

What should I do if my landlord does not return my security deposit?

If you receive a security deposit refund letter that documents the damage or non-payment for which you are responsible, you may have no luck getting your security deposit back. However, there are several things you can do to ensure that you get back at least some, if not all, of your security deposit.

Be sure to provide your landlord with a forwarding address to receive the security deposit refund letter. A guided tour before you go will also help you know in advance what your landlord plans to deduct from your security deposit. You may even be able to arrange the necessary cleaning or repairs yourself or make a deal with your landlord that will save you money. If you are unable to take a virtual tour, you can always document any damage before moving in with photos and in writing.

If you think your landlord is illegally withholding part of your security deposit, you can write a formal notice explaining why your security deposit needs to be returned. Send the formal notice by certified mail and keep a copy for your records. If you do not receive a response after sending a demand letter, you may be able to pursue your claim in Small Claims Court. If you win in small claims court, you could get your security deposit back and possibly more.

Before you leave your rental apartment, make sure you understand the reasons your landlord might be deducting from your security deposit. The owner’s letter returning the security deposit should detail the reasons why part of your deposit was not returned and what that money was spent on.

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