Security Deposit Deduction Letter (Template and Sample)

When a tenant moves into an apartment, they will usually pay a security deposit. This is an amount held by the landlord during a tenancy. The landlord is required to return this deposit when the tenant moves out of the house or apartment. However, they might need to hold on to a portion or all of the amount to cover unpaid rent or property damage.

As a landlord, you are entitled to receiving your rental unit in the same condition you handed it to a tenant. This, of course, excludes normal wear and tear. To this effect, you can hold on to a portion of the tenant’s security deposit. This deduction is communicated to the tenant through a letter.

Are you a landlord facing unpaid rent or property damage? Here is all you need to know about drafting a Security Deposit Deduction Letter.

Rental agreements are regulated by the law. You are required to refund a tenant’s security deposit once their lease agreement has been terminated. If they owe you money for rent or repairs, you are expected to inform them that you will be deducting the amount from their security deposit. This should be done through a letter sent to the tenant’s current or last known address.

If you don’t have the tenant’s current address, send it to their last known address, which is your property. They might not receive it. However, you will have fulfilled your duty.

In your letter, make sure to include the following:

• Your official name, address, and signature
• The tenant’s name, former apartment number, and mailing address
• The dates of lease agreement commencement and termination
• The exact original security deposit amount
• A list of the deductions you have made from the amount
• Reasons for the deductions
• The balance
• A list of attached documents
• Your contact information, should they have any questions?

Use professional language when drafting your letter. Although you might be disappointed at the rent arrears or property damage, avoid sounding confrontational or aggressive. Calmly explain the situation to the tenant, leaving no room for confusion.

It is also vital that you legitimize the letter by including your official signature or letterhead, if possible.

Security Deposit Deduction Letter (Word Template)

While you have the right to deduct a tenant’s security deposit, the deduction should be done by the book. You should accompany your Security Deposit Deduction Letter with the relevant lists and receipts to justify your decision. Failing to do so could leave you vulnerable to lawsuits. In your letter, mention the tenant’s lease and that it has ended. Explain why you are deducting their deposit and provide exact amounts.