What Is Security Deposit Return Laws?

Why Deposit Return Laws Trip Up So Many Landlords

Most landlords know they need to return security deposits. What catches them off guard is how strict the rules are about timing and documentation. Every state has a deadline, and those deadlines are measured from the day the tenant surrenders possession (turns in keys and moves out), not from when you get around to inspecting the unit.

Miss that deadline by even one day in some states, and you forfeit the right to make any deductions. In California, you have 21 days. In New York, 14 days. That clock starts ticking the moment the tenant hands over the keys, and it does not stop for weekends, holidays, or because your contractor has not given you a repair estimate yet.

This is one of the most common areas where landlords get sued in small claims court. And they lose. A lot.

State-by-State Return Deadlines

Here are some common state deadlines (always verify current law, as these can change):

• California: 21 days
• Texas: 30 days
• New York: 14 days
• Florida: 15 days if no deductions, 30 days with deductions (must send notice of intent to deduct within 30 days)
• Colorado: 30 days (unless lease says up to 60)
• Illinois: 30-45 days depending on unit count
• Arizona: 14 days
• Georgia: 30 days
• Oregon: 31 days
• Washington: 21 days

What You Can and Cannot Deduct

Allowed deductions:

• Unpaid rent (including the last month if the tenant skipped it)
• Damage beyond normal wear and tear (holes in walls, broken windows, stained carpet from pet urine)
• Cleaning costs to return the unit to the condition it was in at move-in (not just "make it cleaner")
• Unpaid utilities if the lease holds the tenant responsible
• Key replacement if keys were not returned

NOT allowed:

• Normal wear and tear (paint fading, minor scuffs on floors, carpet wearing thin in high-traffic areas)
• Pre-existing damage that was documented at move-in
• Upgrades (you cannot charge the tenant because you decided to install new countertops after they left)
• General maintenance or improvements

Real Example: Proper Deposit Disposition

Tenant moved into a $1,500/month unit 2 years ago and paid a $1,500 security deposit. They move out on March 15. You have 30 days (your state's deadline) to return the deposit or provide an itemized deduction statement.

You inspect the unit on March 16 using your move-out checklist and find: 3 large holes in drywall ($150 to patch and paint), carpet has pet stains ($400 for professional cleaning), the oven is caked with grease ($75 for deep cleaning), and the tenant owes $200 in unpaid water bills.

Your itemized deduction letter looks like this:

Security deposit collected: $1,500. Deductions: Drywall repair (3 holes, bedroom and living room) $150; Carpet cleaning (pet stain removal, living room and hallway) $400; Oven deep cleaning $75; Unpaid water bill (February-March) $200. Total deductions: $825. Refund to tenant: $675.

You mail the check and the itemized statement to the tenant's forwarding address by April 10, well within your 30-day deadline. This is exactly how it should work.

How to Protect Yourself

Step 1: Do a thorough move-in inspection. Document the condition of every room with photos and a signed checklist before the tenant moves in. This is your baseline. Without it, the tenant can claim every problem was pre-existing.

Step 2: Use a move-out checklist. Walk through the unit systematically after the tenant leaves. Compare against the move-in documentation. Photograph everything you plan to deduct for.

Step 3: Get written estimates or receipts. If you are deducting $400 for carpet cleaning, have the invoice from the cleaning company. "I estimated it would cost $400" will not hold up in court. Real invoices and receipts are your proof.

Step 4: Send the disposition letter certified mail. Mail the itemized statement and any refund check to the tenant's last known address (or forwarding address if provided) via certified mail. Keep the receipt as proof of mailing date.

Step 5: Calendar the deadline immediately. The day the tenant surrenders keys, put the return deadline in your calendar. Do not rely on memory. A missed deadline can cost you the entire deposit amount plus penalties.

Common Mistakes

Missing the deadline. This is the big one. Even if the tenant caused $3,000 in damage, if you miss your state's return deadline, you may owe the full deposit back plus penalties. There is no grace period for this.

Not itemizing deductions. A check for $800 with no explanation is not compliant. You must provide an itemized list of every deduction with the amount and reason. Many states require receipts or estimates as well.

Deducting for normal wear and tear. Five-year-old carpet that is worn in the hallway is not damage. Walls that need repainting after a 3-year tenancy is not damage. Judges are experienced at distinguishing wear from damage, and they side with tenants on this constantly.

Not collecting a forwarding address. If you do not know where to send the check, you can still be penalized for not sending it. Ask for a forwarding address at move-out. If they do not provide one, mail it to the rental address (the post office will forward it if they filed a change of address).

Frequently Asked Questions

How long do I have to return a security deposit?

It varies by state. Common deadlines range from 14 days (New York, Arizona) to 30 days (Texas, Colorado, Georgia). Always check your specific state statute and be aware that some states have different timelines depending on whether you are making deductions.

What if the tenant's damage exceeds the deposit?

You can send the tenant a bill for the difference. If they do not pay, you can pursue them in small claims court. Document everything with photos, receipts, and estimates. In practice, collecting beyond the deposit is difficult, which is why thorough tenant screening matters so much.

Can I use the last month's rent as the security deposit?

Generally no. The security deposit and last month's rent are legally separate. A tenant cannot unilaterally decide to skip the last month's rent and tell you to "use the deposit." You can deduct unpaid rent from the deposit after move-out, but the tenant is still obligated to pay rent through the end of the lease.