How To Write a Security Deposit Return Letter to Your Tenant | FREE EXAMPLE

Real estate is a lucrative form of investment. As an aspiring landlord, investing in rental properties is a good idea. However, it comes with lots of roles and responsibilities.

One thing you must consider is the security deposit—an amount paid by a potential renter before moving into your rental property. 

The security deposit serves as your financial protection from possible damages, unpaid rent, or other liabilities incurred by your tenant. However, only over 40% expect to see their full security deposit returned when moving out.

Enter the security deposit return letter. This letter informs your tenants how much security deposit you must return. Why is it necessary, and what should you indicate in the letter? 

Read on to find out the answers to these critical questions. 

What Is a Security Deposit Return Letter?

A security deposit return letter is exactly what it is—a written document sent to your tenant for the return of their security deposit. This letter shows the total amount being returned and the breakdown of all deductions made, such as the following:

• Property damages—costs for repairing any damage caused by the tenant beyond the normal wear and tear.

• Unsettled bills—charges for any unpaid utility bills or services the tenants are responsible for.

• Unpaid rent—amounts owed for rent not paid during the tenancy.

The security deposit return policy varies from one state to another. But generally, landlords must return a security deposit with a list of deductions between 14 and 60 days after a lease ends. That said, a security deposit return letter shows that you’ve informed your tenants within the required time frame.

Charles Platon, Founder at Peel and Stick Wall Murals, highlights the value of a security deposit return letter for legal protection and regulatory compliance.

Platon says, “The security deposit return letter seeks to protect both parties: The property owner and tenant. Should your renter dispute the amount being returned, you have something to show as a backup. That can legally protect you from any potential liability.”

Platon continues, “Meanwhile, the letter honors what your tenant deserves by detailing exactly what they are entitled to. However, ensure that the calculations and all the details indicated are complete and accurate.”

Alan Parkes, Owner of Denver Roofing & Colorado Springs Roofing, also cites the importance of a security deposit return letter for property upkeep and insurance claims.

Parkes explains, “The letter lets you examine and document your rental property’s actual conditions at the end of the tenancy. It guides you in performing the necessary maintenance and repairs and filing a claim with your insurance carrier.”

Find out how to write a security deposit letter in the next section.

What To Include in the Security Deposit Return Letter

Now, you might be wondering what to include in your security deposit return letter. 

Essentially, your letter seeks to inform your tenant about the security deposit they will receive after the tenancy. But of course, you must justify it with all relevant details. After all, the returned security deposit could be full, partial, or no return at all.

It’s best to formalize your security deposit return letter by following a standard format. 

Why? 

For one, you can use this document for legal disputes should your tenant bring this to court. Likewise, you can use this letter to file a claim for your landlord insurance. 

That said, here’s what to include in your letter:

• Landlord details: Indicate your complete name, property address, and contact information.

• Tenant information: Include the renter’s complete name and contact details.

• Document date: Add the date of the letter after its final draft or when sent to the tenant.

• Returned security deposit: Highlight the total amount of the security deposit returned to the tenant.

• All deductions: Provide a breakdown of all deductions made from the security deposit with a brief explanation for each.

• Attachments: Include a contract copy to remind the tenants of the lease agreements. Also, enclose any relevant quotes/receipts for the rental property upkeep and repairs. Lastly, attach any pertinent documents supporting your letter.

• Letter signature: Of course, sign the letter or have the signature of your authorized representative (like your property manager).

Chris Aubeeluck, Head of Sales and Marketing at Osbornes Law, recommends focusing on the amount of the returned security deposit. Aubeeluck suggests keen attention to detail to avoid any inaccuracies and potential disputes.

Aubeeluck explains, “The letter should clearly indicate whether the security deposit is being fully, partially, or not returned at all. It should also provide reasons for any deductions. For example, if deductions are made for damages, the specific damages should be detailed.”

Security Deposit Return Letter Template

At this point, you understand what a security deposit return letter is. More importantly, when writing one for your tenant, you know what to include. 

Given all the guidelines discussed above, here’s a sample template for your reference:

[Your Name] [Your Property Address] [Your Contact Information] [Date] [Tenant’s Name] [Tenant’s Contact Information] Dear [Tenant’s Name], Subject: Security Deposit Return I hope you are well. This letter is to inform you about the return of your security deposit for the rental property at [Property Address]. Please see the details below: Total Security Deposit Returned: $[Total Amount] Deductions: Property Damages: Description: [Brief description of the damages] Amount: $[Amount] Unsettled Bills: Description: [Brief description of the bills] Amount: $[Amount] Unpaid Rent: Description: [Brief description of the unpaid rent] Amount: $[Amount] Total Deductions: $[Total Deductions] Net Amount Returned: $[Net Amount Returned] Enclosed, you will find: A copy of the lease agreement. Receipts for any repairs. Other relevant documents. You will receive a [refund method] for the security deposit amount within [number of days], as per our lease agreement and state regulations. If you have any questions or concerns, please contact me at [Your Contact Information]. Best wishes for the future! Sincerely, [Your Signature] [Your Name] [Your Title or Position, if applicable]

Final Words

A security deposit return letter is vital for lease agreements and final landlord-tenant interactions. This letter outlines how much deposit you must return to your renters. It protects you as the landlord and your tenant when moving out.

Include the details discussed above in your security deposit return letter. Ensure they are accurate and complete, backed with supporting documents and relevant information. More importantly, consider using our example sample template outlined above to create your own.