How to Notify Tenants of Damage Deductions from Security Deposit

Let’s say you decide to deduct part of a security deposit or withhold the entire amount to repair apartment damage left by a departing tenant. When you return the remainder of the deposit to the tenant, or if you return nothing at all, it’s a good idea to send a letter to the tenant, itemizing the damage to the apartment and your cost to repair it.

Taking this step makes it less likely that a dispute will arise and that the tenant will sue you in small claims court for the amount you deducted. And if the tenant later sues, a court is more likely to decide that you properly deducted a part or all of the security deposit if you give enough details about the damage.

We’ll tell you what information and documents to include in your letter to the tenant. And we’ll give you a Model Letter: Notify Tenant of Damage Deductions.

Send Letter Itemizing Damage

Send a letter to the tenant, itemizing the damage to the apartment and the cost to repair it. Include the following five points in your itemization:

Item damaged. List each damaged fixture, piece of furniture, or appliance separately. A separate line for “dishwasher,” “stove,” and “refrigerator” is much better than one line for “kitchen appliances.”

Location. Note the room in which the damage is located. This is especially important for walls, ceilings, floors, and windows. You should also specify the room when itemizing lighting fixtures, smoke detectors, and other items found in more than one room of an apartment.

Kind of damage. Saying that an item suffered “damage” is too vague, even if dressed up with adjectives like “substantial” or “excessive.” Instead, describe how an item was damaged. A single descriptive word—like “chipped,” “scratched,” “stained,” “torn,” “cracked,” or “burned”—should do.

Repairs needed or done. Briefly describe what you must do or have already done to fix the damage. Use precise words, such as “spackle,” “sand,” “paint,” “shampoo,” “steam,” and “deodorize.” Courts prefer descriptive words like these to general ones, such as “clean” and “repair.” Also, if you replace rather than repair the item, say so on the itemization.

Repair or replacement cost. Say how much it will cost to repair or replace each item. If you’ve already made the repair or bought the replacement, list exactly what you spent. If you send out the itemization before you’ve done the repair or gotten an invoice, you should estimate the cost.

Include Proof of Damage

With your letter, include copies of whatever proof you have of the damage. Here are some examples of what you can include:

Inspection report. You can include a copy of the inspection report filled out by an employee after a tenant has vacated the apartment. That report shows what damage the employee found.

Photographs. Photographs of the damaged areas of the apartment offer visual proof of the work that needs to be done. You can include copies of these photographs with the letter to the tenant.

Work orders and invoices. You can also include a copy of the work orders if one of your employees repaired the damage, and/or a copy of the invoice if you use an outside contractor to repair the damage.

When to Send Letter

If your deductions don’t use up all of the tenant’s security deposit, send your letter when you return what’s left. New York law doesn’t require you to return what’s left of the tenant’s security deposit within a certain time, but your lease may require you to return the security deposit by a certain deadline. So be sure to check your lease and comply with its requirements. If your lease doesn’t have such a requirement, it’s still a good idea to return what’s left of the security deposit—along with your letter—as soon as possible.

If the cost to repair the damage is as much as or greater than the amount of the security deposit, you won’t be returning any money to the tenant. In this situation, just send the letter notifying the tenant of the damage deductions as soon as possible. You may also want to speak to an attorney about suing the tenant to recover the damages in excess of the security deposit.

Keep Letter and Proof in Tenant’s File

Keep a copy of the letter, as well as the proof you have of the damage and its cost, in the tenant’s file. That way, if the tenant sues you in court to recover the security deposit, you’ll have proof of the itemized damages and their costs.

PRACTICAL POINTER: Consider having pre-written move-out instructions to hand a leaving tenant, which cover cleaning requirements, how to perform minor repairs such as fixing holes from picture hooks, and how and when the final inspection may be conducted. In addition, conducting a pre-move-out inspection of the apartment to check for extensive damage requiring substantial reconstruction is also beneficial to both the owner and tenant. If there is any, you can discuss it with the tenant before he moves out so it won’t come as a complete shock when you deduct most or keep all of the tenant’s security deposit.