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Security deposit refund letter format (+ deduction rules)

Deposit refunds are where landlord reputations are made or lost. Use a written settlement letter, itemise every deduction, and refund inside a stated window.

Refund letter format

"Date: ___. To [Tenant], [Address]. This confirms settlement of your security deposit of ₹___ for [Room/Bed, Property] held since [date]. Deductions: unpaid electricity ₹___ (meter reading attached), damage to ___ ₹___ (photo attached). Net refundable: ₹___, transferred to your account ending ___ on [date] via [UPI/NEFT ref no.]. No further dues remain on either side. Signed, [Landlord/Manager]."

Legitimate vs illegitimate deductions

  • Legitimate: unpaid rent or utilities, damage beyond normal wear (documented with photos), unreturned keys/access cards, agreed cleaning charges stated in the agreement.
  • Not legitimate: normal wear and tear (faded paint, minor scuffs), repainting entire rooms as routine, charges never mentioned in the agreement, or "processing fees".

Timelines and best practice

  1. Joint move-out inspection with a photo checklist.
  2. Itemised settlement letter within 48 hours.
  3. Refund within 7–15 days by traceable transfer — never cash.
  4. Track it in a system, not memory; refund delays are the most-cited complaint in tenant reviews of managed accommodations.

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