A security deposit acknowledgment letter is a professional document verifying a security deposit has been paid, used for expenses, or refunded. Landlords should carefully track security deposit funds, and writing a security deposit acknowledgment letter can help them do this. These letters are receipts documenting the payment, use, or refund of a security deposit.
This article discusses the need for security deposit accounting and provides a format for a security deposit acknowledgment letter. We have also provided a sample letter to demonstrate the format’s use.
Handling Security Deposit Funds
Security deposits protect you as a landlord from unexpected costs, such as apartment repairs or unpaid rent. Security deposits belong to the tenant unless you need them for unpaid expenses or repairs. You should keep these funds in an escrow or savings account. You must pay interest on the deposit funds either annually or at the end of the tenant’s lease in some states. Write a security deposit acknowledgment letter when:
- A tenant pays a security deposit
- You pay interest on the deposit
- You use the funds for apartment damages
- You use the funds for unpaid rent or broken lease
- You refund all or part of the security deposit
This careful accounting will help ensure that you meet the state and local requirements for security deposits. Each letter (or receipt) you write should be signed by both the tenant and the landlord and dated. Send the tenant a copy of the letter within 30 days of signing.
Each state has time limits on when you must refund or account for a tenant’s security deposit. In every case, you must do this within 60 days of the tenant’s move date. Check your state’s tenant and landlord laws for more detailed information.
Writing a Security Deposit Acknowledgment Letter
Your letter will vary according to whether or not you need to use the security deposit funds for repairs, broken leases, or unpaid rent. In addition, your letter may need to reflect information about the escrow or savings account in which you hold the funds. You might also need to account for annual interest payments on the funds. Formatting your security deposit acknowledgment letter can be simple when you have a prepared example that incorporates each of these requirements. Below, you will find a format that includes example areas for all of these needs. When using this format, you can choose to remove the sections that do not apply or leave them in for an all-purpose format.
Security Deposit Acknowledgement Letter Format
{your name}
{company name}
{company address}
{date}
{tenant name}
{tenant address}
Subject: Security Deposit
The tenant {tenant name} paid the landlord {landlord name} a security deposit of {amount} on {date} for the following property:
Property Address: __________________________________________________________________
Security Deposit Escrow Account
Account Name:__________________________
Account Number: ________________________
Account Type: ___________________________
Annual Interest Rate:______________________
Bank Name: ____________________________
Bank Address:___________________________
____________________________
Interest Paid:_____________________________
Check Number:___________________________
Date:___________________________________
Deductions from Security Deposit {tenant name}
The landlord {landlord name} {(refunded) or (did not refund)} the tenant’s security deposit on {date}.
Amount Refunded:__________________
Check Number:_____________________
________________________________ _____________________
{landlord name} {date}
_________________________________ ______________________
{tenant name} {date}
Sincerely,
{your signature}
{your name}
Sample Security Deposit Acknowledgement Letter
Brent McIntyre
Neverland Properties
2048 North Jackson, Suite 200
Harrison, PA 45668
September 20, 2032
Ellen High
6004 West 93 E. Ave.
Harrison, PA 45665
Subject: Security Deposit
The tenant Ellen High paid the landlord Brent McIntyre a security deposit of $2000.00 on September 1, 2030, for the following property:
Property Address: 2048 North Jackson, Apt. 206
Security Deposit Escrow Account
Account Name: Neverland Properties Escrow
Account Number: 69843326
Account Type: Escrow
Annual Interest Rate: 0.05
Bank Name: Harrison Savings and Loan
Bank Address: 2046 South Midland
Harrison, PA 55669
Interest Paid: $20.00
Check Number: 596678
Date: September 20, 2032
Deductions from Security Deposit Ellen High
The landlord Brent McIntyre refunded part of the tenant’s security deposit with interest on September 20, 2032.
Amount Refunded: $1920.00
Check Number: 596678
Brent McIntyre
Brent McIntyre September 20, 2032
Ellen High
Ellen High September 20, 2032
Sincerely,
Brent McIntyre
Brent McIntyre
Security Deposit Acknowledgement Letter (Word Template)
- Check your state’s tenant and landlord laws for the regulation of security deposit funds
- Use best practices in all your security deposit accounting
- Write a receipt or acknowledgment letter when you transfer funds
- Obtain the tenant’s signature
- Provide the tenant with a copy of each security deposit acknowledgment letter
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