How to Return a Security Deposit the Right Way

The steps landlords follow to return a deposit after a tenant moves out, including deadlines and itemized deductions.

When a tenant moves out, you owe them their security deposit back, minus anything you are allowed to deduct. Do it on time and in writing, and you avoid most disputes. Every state has its own rules, so check yours.

The usual steps

1. Get the keys and the new address. A tenant's written notice to vacate often includes a forwarding address. If not, ask for one.
2. Inspect the rental. Walk through it, ideally with the tenant, and compare it to the move-in condition. Take dated photos.
3. Decide what to deduct. Normal wear and tear, like faded paint or light carpet wear, is not a reason to deduct. Unpaid rent and damage beyond normal wear generally are.
4. Keep receipts. For repairs and cleaning, keep the bills.
5. Send the deposit and a statement in time. Write down the deposit held, each deduction with its amount, the total deducted, and the amount returned.

Watch the deadline

Every state sets a deadline. It is commonly somewhere between 14 and 30 days after the tenant moves out, but yours may differ. Missing it can cost the landlord the right to deduct anything, and some states add penalties.

What the statement should include

• The date, the tenant's names, and the forwarding address
• The rental address and the move-out date
• The deposit amount
• Each deduction, with a short description and the amount
• The total deducted and the amount returned
• The landlord's name, address, and signature

Good practice

• Give tenants a move-in checklist so the starting condition is on paper.
• Send the statement by a method you can prove, and keep a copy.
• If the tenant owes more than the deposit, say so, and say how much.

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