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Disposition of Security Deposit

What is a Disposition of Security Deposit?
A disposition of security deposit, or security deposit deduction form, is used by landlords to provide tenants a detailed breakdown of charges applied against the security deposit. Once the tenant has moved out of the rental the landlord must return any unused portion of the security deposit.

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Not only are your renters interested in their security deposits, but so are states. States have laws that dictate how a landlord can use a tenant’s security deposit and, in some cases, how the security deposit must be stored during tenancy. The security deposit refund form lets landlords return the security deposit to their tenants and note any deductions that were taken.

What Landlords Can Deduct From the Security Deposit

The security deposit is intended to cover damage to the apartment caused by tenants or their guests. Landlords cannot use the security deposit to cover instances of normal wear and tear. This excludes chipped or scratched paint, faded furniture and scuffed walls.

Examples of damages that landlords could use the security deposit to repair include:

  • Cleaning stained carpet
  • Fixing broken doors, windows or locks
  • Repairing a clogged drain
  • Cleaning up after a move-out (only to return the unit to move-in condition)
  • Cleaning up pet damage
  • Broken appliances or fixtures
  • Damaged furniture

Landlords can also use the security deposit to cover missing or late rent.

Before deducting from the renter's security deposit, check your state’s laws to see whether there are any prohibitions particular to your state. Also check the time frame by which you must return the security deposit, since this varies by state as well.

Security Deposit Return Letter

The security deposit refund letter, sometimes called the return or disposition letter, clarifies for each tenant how the security deposit was used. In the simplest cases, the tenant gets a full return of their security deposit. The forms begin with both the landlord's and tenant’s personal and rental property information.

Most security deposit disposition forms have lines for renter credits — for instance, the money they paid in security deposit — and debits, namely the cost of repairing or replacing damaged items. By filling in the amount of money for repairs and noting the repairs, then doing the math, you can complete the form to show the renter how much of a return they're receiving, if any. The form concludes with a date and landlord's signature.

Since many tenants will complain about deductions to their security deposit, it's wise to include documentation for any deductions, such as a receipt for carpet cleaning or photographs of excessive damage. Some landlords highlight lease clauses that were broken by the renter, as this can discourage renters from suing the landlord for misuse of security deposit funds.

Why Use American Apartment Owners Association Forms

American Apartment Owners Association offers downloadable security deposit disposition forms, which are convenient for landlords and property managers. American Apartment Owners Association forms are low-cost and easy to use. Many of the forms are free for AAOA members.

Download a Security Deposit Refund Letter

Time is of the essence when you’re dealing with security deposit refunds. Order your security deposit disposition form today.

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