Initial Inspection Prior to Move-out

Landlords generally must provide tenants with a notice of the tenant's right to a pre-move-out inspection.

Returning the Security Deposit

1. The lease can allow the landlord up to 21 days to provide the tenant with the final accounting and return the balance of the tenant's security deposit. The time period begins when the landlord regains possession of the property.
2. This final "disposition of the security deposit" accounting must be either personally delivered or sent by first-class mail, postage prepaid, to the last known address of the tenant. Often this means mailing it to the premises the tenant just vacated. If it is returned to you by the post office, keep the original, plus a copy of the unopened return envelope as proof that you mailed the accounting within the prescribed time. If the returned mail has a forwarding address, send it to that address.
3. If you have a roommate situation, it is advisable to make any refund check payable to all of the tenants who have signed the lease. This way you avoid the situation where each tenant claims he or she should have received the deposit refund.

Security Deposit Accounting Requirements

1. Owners and managers must provide their tenants with written receipts showing the charges incurred to repair or clean the apartment if the total amount is $125 or more. The receipts must be attached to the final security deposit accounting.
2. If the landlord did the work personally, he or she must "reasonably" describe the work performed and must include the time spent and the reasonable hourly rate charged. Arguments about what is "reasonable" are common, so a conservative approach is highly recommended.
3. If a contractor does the work, the owner or manager must provide the tenant with a copy of the bill, invoice or receipt supplied, including the contractor's name, address and telephone number.
   
4. Owners and managers must also provide receipts for materials if the tenant is being charged for them. Property owners or managers who purchase materials on an on-going basis may provide the tenant with a copy of a vendor price list or any other vendor document that reasonably documents the cost of the item used in the repair or cleaning of the unit.
5. If a repair cannot be made, or receipts are not available within the 21-day period, the owner or manager may deduct only a good faith estimate of the deduction amounts and must provide an estimated accounting to the tenant within the 21-day period.
6. If the owner or manager doesn't have the receipts within the 21-day period because they are still with the contractor, the owner or manager must provide the name, address and telephone number of the contractor along with the estimate. When the final figures and receipts are available, the owner or manager must provide a final statement within 14 days from the date the repair is completed or from the date the owner or manager receives the receipt documents from the vendor.
7. The tenant has 14 days after receiving the final itemized statement to request additional receipts from the owner or manager. If receipts are requested, the owner or manager has another 14 days to provide the additional receipts. 

The Penalties

The damages for the bad faith retention of a security deposit by a landlord are up to two times the amount of the security deposit. They may be awarded in a lawsuit even if the tenant did not ask for those damages in the lawsuit.

Resolving Security Deposit Disputes

If you cannot reach an amicable agreement with the tenant over a security deposit dispute, the tenant may file suit in Small Claims Court. The jurisdictional limit of Small Claims Court is $7,500 per claim by an individual as of January 1, 2006 (up from $5,000). Claims by entities such as partnerships, corporations and LLCs are limited to $5,000 or less. Actions against guarantors or co-signers of the lease are limited to $4,000 per claim or $2,500 if the guarantor does not charge a fee for the service.