Security Deposit Form

Security Deposit Form

The American Apartment Owners Association (AAOA) is here to help landlords protect themselves and their investments. One way in which we do that is through the forms you need to ensure you are operating legally and have all necessary protections in place. The rental deposit form is an excellent choice for those landlords who want to be clear and concise with their tenants regarding the security deposits they pay when they rent the property.

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What is a Rental Deposit Form?

A rental deposit form itemizes any and all deposits the renter must pay to take possession of the rental unit. These deposits may include security, pet, water bed, key, remote, or other types. The form is useful for landlords and tenants to properly collect, pay, and keep track of any and all deposits for a rental unit. Utilizing a rental deposit form helps to prevent any dispute that may arise regarding the amount of a deposit paid.

Understanding the Security Deposit’s Role

A security deposit is a payment - often the cost of one month’s rent — that the landlord holds in escrow on a rental property. The landlord keeps that deposit in a bank account, where it will accrue interest, until the tenant moves out of the property. If the tenant leaves the property in the same condition it was in prior to the rental agreement, not counting normal wear and tear, the landlord repays the deposit, and in many states does so with interest. If the tenant leaves a problem that requires extensive cleaning or repair, the landlord uses the security deposit funds to pay for those repairs.

What the Rental Security Deposit Form States

The rental security deposit letter serves as a receipt and agreement about the rental deposit. It will include:

  • Acknowledgement of security deposit receipt
  • Information about where the security deposit is being held and what interest it is earning
  • Information about what interest you will pay to the tenant when the lease is up and the security deposit is repaid
  • Information about whether or not the annual interest on the security deposit has been paid on a yearly basis

The rental deposit agreement is important for the tenant, landlord and any future buyer of the property. For the tenant, a security deposit agreement provides peace of mind about where the deposit is and what interest it is earning. For the landlord, the security deposit letter outlines how and when the deposit is paid. If someone buys the property in the future, it also provides protection for the buyer, because prospective buyers of a rental property could be held liable for the deposit when a tenant moves out. The receipt outlines the responsibility for the repayment of the security deposit, so the buyer can work that into the purchase price or make arrangements to take control of the funds.

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Other Security Deposit Forms

Aside from the main rental security deposit form, there are other documents that you need to consider.
A security deposit receipt is a legal document showing proof that you, the landlord, has collected the security deposit from the tenant. It shows the amount of deposit made and in which bank or institution it’s held. Both the tenant and landlord should then affix their signatures to this security deposit agreement form, making it official.

The other rent security deposit form you need to have ready is the security deposit refund letter. Also called a security deposit release form , it’s used at the end of the rental period when the security deposit is returned to the tenant. The most important part of this form is the breakdown of deductions to pay for any repairs or damages made by the tenant. Some states will also require you to pay interest charges on the deposit, which should be indicated in this form as well.

You’ll have access to all security deposit agreement templates and security deposit form PDFs when you join the American Apartment Owners Association.

The Importance of a Security Deposit Receipt

A rental security deposit agreement form is essential for recording that a transaction occurred between you and the tenant. When disputes arise, it can serve as legal proof to the court that the tenant has already paid their security deposit. Some state landlord tenant law guidelines require landlords to provide a copy of this security deposit form to tenants.

A security deposit receipt protects both the tenant and the landlord. For the tenant, having documented proof of payment is essential. It's especially true if he or she is paying in cash since cash doesn't have a paper trail.

As the landlord, giving out a deposit receipt is good business practice. It will also make it easy to manage your rental business. Imagine if you had to manage rental agreement details for an apartment complex. It gets complicated to remember the security deposit transactions of dozens of tenants.

How to Write a Security Deposit Receipt

It’s recommended that you start with a set security deposit agreement format instead of writing one from scratch. It will make everything more straightforward, while ensuring you don't miss out on any critical details. You can download our templates once you have a membership.

With the document ready, start by writing down the date of the receipt and the full name of the tenant. Remember to fill it out correctly: any errors or omissions can be used to nullify your case should you choose to file an eviction proceeding in the future.

Next, state the amount of funds deposited, plus the bank or institution where it is held. Indicate the bank’s name and complete address, as well as the account number. Also be sure to write down the date the deposit was made.

Finally, affix your signature and the date to make it official.

The Benefits of a Security Deposit Refund Letter

Like the rental deposit receipt form, a deposit refund letter serves as legal proof that the deposit has been returned to the tenant. But the importance of this form is emphasized even more when there are deductions to be made.

A refund letter also clearly states how much was deducted from the deposit amount, and why. It gives the tenant a breakdown of such expenses so that everything is in black and white. Ideally, these have already been discussed beforehand, during the moving out process.

For landlords, a refund letter protects you from any illegal deduction complaints from a tenant. You can also show it as proof that you have paid out the correct interest on their security deposit if required by law.

How to Write a Security Deposit Refund Letter

As with any other important document, begin by downloading a copy of the security deposit refund form PDF here at our website.

First, provide necessary details like the name of the tenant and the address of the property in question. Again, be careful to fill this out correctly, as any errors can invalidate your claims in court.

Next, indicate information regarding the security deposit. Give the exact amount deposited by the tenant, and the interest accrued if applicable. More importantly, write down the exact date when this was paid to you—you can use the security deposit receipt as a supporting document.

Then, list down all the deductions due to any damages made by the tenant on the property. Be as exact and descriptive as you can to avoid any misinterpretation.

Finally, tally the outstanding deposit amount due to the tenant (deposit made less any deductions). Affix your signature to make it official.

Signing up for AAOA will get you access to security deposit form templates and any other management services you need such as tenant screening or tenant background checks. Sign up for your account today!

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