In addition to the security deposit lease agreement detailing the terms of your lease and the policies and procedures for the security deposit, a separate document which will serve as a security deposit receipt should be included in every rental closing package.
Basics of the Security Deposit Receipt
This document will serve as a rider to your lease and stand as proof that you have received the tenant’s security deposit. The tenant will sign it at the same time they sign the lease agreement.
In states requiring you to inform the tenant of the bank where their money is being held and the interest rate at which it is to be processed, this acknowledgment will serve as supplementary notice.
Time Frame for the Deposit Receipt
Send a copy of this notice to the tenant within 30 days of receipt of their security deposit.
The Requirement to Pay Tenant Interest
In addition, when the tenant’s lease is up, or according to your state’s laws -- often annually -- you must pay them the interest earned on their security deposit. At the time of interest payment, you must again have the tenant sign this notice and give them a copy within 30 days so the tenant acknowledges they have received the interest to which they are entitled.
Importance of Security Deposit Receipt
Acknowledgment of receipt of the security deposit by all parties is of key importance. It serves as protection for you, for the tenant and for any future buyer of your property.
This acknowledgment protects you, the landlord because many states require you to notify the tenant in writing as to where their security deposit is held in escrow.
The security deposit acknowledgment is important to the tenant because it serves as proof that they did, in fact, pay their deposit. It also provides them with the peace of mind of knowing where their deposit is being held.
For Prospective Buyers
This clause is equally important to any prospective buyer of the property. The buyer may not be aware that a security deposit has been collected if a specific acknowledgment of receipt of funds isn't evidenced. Any new owner will still be responsible for returning the security deposit to the tenant, whether or not they are aware of its collection. Armed with documentation of the security deposit, the buyer can have the total amount of security deposit built into the sale price of the property.
Sample Security Deposit Receipt:
This is an acknowledgment that the Tenant [Insert Tenant’s Name] residing at [Insert Tenant’s Address], paid the Landlord a Security Deposit of [Insert Amount of Security Deposit Paid] on [Insert Date the Deposit Was Received]. The terms regarding the receipt, storage (escrow), and the return of the Security Deposit have been spelled out and agreed to by the Tenant in the original Lease agreement.
This shall serve as the Tenant’s annual report of Tenant’s Security Deposit.
Tenant’s Security Deposit is being held according to the following details:
Account Name:..........................Landlord Account Name
Account Type:............................Account Type
Account Number:.......................Account Number
Bank Name:...............................Bank Name
Bank Location:...........................Bank Location
Annual Interest Rate:................Annual Interest Rate
Security Deposit Amount as per Tenant’s Lease Agreement:..........$ Security Deposit
Annual Interest Due Tenant as per Account Interest Rate:..................$ Interest Owed
__________Tenant has been paid the annual interest as of the date of this Notice.
__________Tenant has not been paid the annual interest as of the date of this Notice.
Tenant(s): __________________________ Date: __________ Time: ____________
Management: _______________________ Date: __________ Time: ____________
The information provided on this website, and any outside information linked to, is for guidance only. It is not legal advice. Please consult legal counsel for advice specific to your situation.