As a landlord, you put some folks into your unit. They perform well enough during the lease period. They move out of the unit and leave you a forwarding address. You're content and satisfied until you go into the unit and witness destruction and degradation in your rental unit. You think you have all the rights in the world, as a landlord, to NOT return the rental deposit. If you think this, you're right and yet very seriously wrong at the same time.

It simply is not enough to keep your tenant's rental security deposit without some form of due process. It is also frowned upon to keep the rental deposit for missing rent in some locales. Doing so could end up ugly for you as you stare down a lawsuit! As with any form of landlording, there are laws that you must follow and how you handle your renter's security deposit is one of them. Here is how to handle the rent security deposit after the renter has gone:

 

Contact the tenant!

Notify the tenant as soon as possible. Regardless of how, when, or why the tenant left, you MUST notify them within your locale's allotted time period with the reason why the renter does not get all of or any of their deposit returned along with an itemized receipt showing what the deposit went towards. Do NOT wait until after the expiration period to send the letter. You would also be wise to send the letter to the renter's last known address which is the address of your unit. Don't trust the former customer to be accurate with their new address.
 

Details, details, and more details!

The letter must clearly state, with evidence, why the money is not being returned if that is the case. List all infractions of why it is not being returned. Example: The carpet is soiled beyond saving so you would list the costs associated with removing the carpet and pad, purchasing new carpet, and costs of carpeting material. Use a bullet list of items you used the deposit for in order to fix with the problem. Add a line item of actual cost for each item. If your tenant was an angel and the unit looks immaculate, then your job is easy! Send them a certified check for the full refund and be done with it!
Tip: Don't forget to charge for labor if you do the work yourself. My labor charges are quite high since I usually must take time off from work to re-fit a rental unit.

Deposits aren't open checkbooks.

Use the deposit accordingly! This means stipulating in your lease what the customer is liable for. If the gutter falls off during the lease period and you never made mention of what tenant's are responsible for, you cannot charge for gutter replacement using the money. It won't fly with the renter and it certainly won't fly with a judge in court! This all has a lot to do with proper and correct lease preparation.

Pre-existing damage

Don't charge for pre-existing damage. How do you know that window in the basement was broken prior to the renter moving in? How does the tenant know the window was broken when they moved in? Small items like this can be overlooked by both parties. How do you remedy such situations? Easy! Perform a proper and thorough walk-thru, noting all damage, prior to signing the lease. Allow for time after the lease begins for your renter's to note items missed in the walk-thru. Keep this list with your lease paper work. When the lease expires, cross check any damage you find with the rental in your walk-thru.

Never send cash!

Never, EVER, return money via cash! Always use something that can be tracked to an institution outside your control. That means using certified checks, money orders, and if you must, personal checks. If you use a personal check make certain to write in the memo what it is for. Include a receipt for whatever means you return the loot.
You'd never think something as simple as this can be so complicated but there is a reason for this landlord tip: Some people are looking to sue you for whatever reason they can conjure. Mitigate this risk as best as you can and following these tips is one way after the lease has expired.