It's part of the rental process for you to collect a deposit of some kind from your tenants. Whether it's to cover possible damages (security deposit) or even the addition of a pet on the lease (pet deposit), this money is your safeguard should repairs become necessary after the tenant moves out.

What you can't do though, is keep the deposit without supplying proof as to what you've spent the money on. Anything you don't use must get returned, whether it's the full deposit or a portion. The best way to do this is to keep it professional with a return of deposit letter.

What does a return of deposit letter tell your tenant?

In the simplest of terms, a return of deposit letter tells your tenant how much money they're getting back from their deposit. The answer is either all, part or none of the total sum based on what you need to use the funds for by way of repairs or reimbursement.

Include as many details as possible if you're not returning the full deposit since there are only certain things you can apply a deposit to. Normal wear and tear of your property doesn't fall into that category, but other repairs do. Additionally, if you're owed any funds when the tenant moves out, you can pay yourself out of the security deposit.

To keep things straight, you can keep all or some of a security deposit to cover:

• The fee associated with breaking a lease
• Outstanding rent due to you
• Unpaid utilities
• Damage to the property above and beyond normal wear and tear
• Excessive cleaning costs
• Removal of abandoned property

If you're looking at a refundable pet deposit, damages and cleaning are usually the two things it can cover, but if you're worried about these costs, it's more advantageous to charge a pet fee, which you keep no matter what.

How long can you wait to send it?

The time frame you have to return a security deposit to a tenant varies between states. You should check local laws to make sure you stay within the legal limit, but on average you have between 21 and 45 days.

You'll need to assess the house and get quotes for any necessary repairs in this time so you can accurately keep the right amount of money. If you're able to collect for any other reason, total that up, as well.

The best way to return the deposit is to send it, and your return deposit letter, via mail. Your tenant should have left a forwarding address with you before moving out, but if not, you can either reach out to them via phone or email within your designated time frame for where to send the letter.

If all else fails, mail the letter and check to the tenant's last known address — your property. Hopefully, it will automatically get forwarded, but if not, you're still doing your due diligence in trying to return the deposit and shouldn't get into trouble.

What goes into a return of deposit letter?

There's no reason to put more into a return deposit letter than the exact information that pertains to the deposit and the check. You can leave out personable language and keep it totally professional, stating the facts. Your only requirement is to comply with local laws as to what information you share and in what format.

That said, a good rule of thumb is to include:

• The property address where the tenant lived
• The total amount of deposit you collected
• How much you are returning
• An itemized list explaining each deduction
• Confirmation that these deductions comply with local laws

In addition to this summary letter, you should also include in the same envelope:

• A check for the balance of the deposit (if any)
• Copies of the bills for the charges you applied the security deposit toward

If the charges exceed the security deposit, you can check local laws to see if you're able to ask for the difference from the tenant. If you are, in lieu of the check, include a request for the tenant to pay the outstanding balance. Make sure to set a deadline along with specific instructions on how to make the payment.

How to format the letter

Because these letters will have different information in them for each tenant, it's helpful to work off a template. You can focus on the details, while the template guides you through the format and the basic language. It also helps you keep it simple and professional.

Below you'll find four sample return of deposit letters based on how much of a deposit you are returning. Simply change everything in parentheses based on your situation. You can also download the template you need here:

• Full refund sample letter template
• Partial refund sample letter template
• Zero return sample letter template
• Asking for additional funds sample letter template

1. Full refund sample return of deposit letter

(Name)

(Street Address)

(City, State, ZIP Code)

(Date)

(The Tenant's Name)

(Tenant's Forwarding Street Address)

(Tenant's Forwarding City, State, ZIP Code)

Re: Return of security deposit

Dear (Tenant's Name),

The letter and attached documents concern your security deposit. By law, I'm required to provide you with this itemized account that shows what portion of your deposit I am returning to you, and what portion is being kept to cover legitimate charges.

This security deposit information relates to your lease from (Start and end dates) at (Address of property). You paid total of $(Security deposit) on (Date you received it).

Enclosed, you'll find the full amount of your security deposit.

Thank you for being such an outstanding tenant.

Sincerely,

(Your printed name)

(Your signature)

2. Partial refund sample return of deposit letter

(Your Name)

(Street Address)

(City, State, ZIP Code)

(Date)

(The Tenant's Name)

(Tenant's Forwarding Street Address)

(Tenant's Forwarding City, State, ZIP Code)

Re: Return of security deposit

Dear (Tenant's Name),

The letter and attached documents concern your security deposit. By law, I'm required to provide you with this itemized account that shows what portion of your deposit I am returning to you, and what portion is being kept to cover legitimate charges.

This security deposit information relates to your lease from (Start and end dates) at (Address of property). You paid a total of $(Security deposit) on (Date you received it).

Enclosed, you'll find $[Total returned]. I've deducted the remainder to cover the following:

(Create an itemized list here)

Attached are copies of each item listed above to verify costs. Please let me know if you have any questions.

Sincerely,

(Your printed name)

(Your signature)

3. Zero return sample return of deposit letter

(Your Name)

(Street Address)

(City, State, ZIP Code)

(Date)

(The Tenant's Name)

(Tenant's Forwarding Street Address)

(Tenant's Forwarding City, State, ZIP Code)

Re: Return of security deposit

Dear (Tenant's Name),

The letter and attached documents concern your security deposit. By law, I'm required to provide you with this itemized account that shows what portion of your deposit I am returning to you, and what portion is being kept to cover legitimate charges.

This security deposit information relates to your lease from (Start and end dates) at (Address of property). You paid a total of $(Security deposit) on (Date you received it).

I'm unable to return any of your security deposit, as it's being used to cover the following:

(Create an itemized list here)

Attached are copies of each item listed above to verify costs. Please let me know if you have any questions.

Sincerely,

(Your printed name)

(Your signature)

4. Asking for additional funds sample return of deposit letter

(Your Name)

(Street Address)

(City, State, ZIP Code)

(Date)

(The Tenant's Name)

(Tenant's Forwarding Street Address)

(Tenant's Forwarding City, State, ZIP Code)

Re: Return of security deposit

Dear (Tenant's Name),

The letter and attached documents concern your security deposit. By law, I'm required to provide you with this itemized account that shows what portion of your deposit I am returning to you, and what portion is being kept to cover legitimate charges.

This security deposit information relates to your lease from (Start and end dates) at (Address of property). You paid a total of $(Security deposit) on (Date you received it).

I'm unable to return any of your security deposit, as it's being used to cover the following:

(Create an itemized list here)

Attached are copies of each item listed above to verify costs. As you can see, the total cost of the charges/repairs is greater than your initial security deposit. In order to cover these damages, you're asked to pay $(Difference) to me immediately. Please (Insert instructions on how they should pay.). Please let me know if you have any questions.

Sincerely,

(Your printed name)

(Your signature)

Process your security deposits ASAP

Speed is the biggest concern when working with a return of deposit letter. Tenants know the money has to come back to them within a set period of time, so you need to work fast to inspect the property and get repair quotes if needed. If you're unable to provide proof for charges, you can't withhold that money from the deposit.

Making this process a top priority when tenants move out, and handing the messaging as professionally as possible, will make wrapping up the security deposit that much easier each time you have to do it.